Economy

Why Black Friday Makes No Sense In Britain

Neither Thanksgiving nor the Friday after is a day off for British workers-shoppers. But there are even more reasons that the imported retail ritual is pointless.

Going fast in London?
Going fast in London?
Andrea Felsted

LONDON — British retailers are trying to go cold turkey on Black Friday. The trouble is, they just can't seem to kick the habit.

Black Friday first crossed the Atlantic six years ago, when Amazon.com Inc. began offering discounts in Britain, and domestic retailers quickly followed suit.

Since then, Britain's Black Friday has grown exponentially. By last year, 44 percent of consumers surveyed by Verdict Retail, a research group, participated in either Black Friday or Cyber Monday, the discount event coinciding with what was for many years the last date to order online for delivery by Christmas.

Retailers have always peddled special offers over the last weekend in November, which frequently coincides with pay-day, as they fight for holiday shoppers. Black Friday promotions may be less effective because retailers have already been discounting heavily

But the escalation of this into a week-long discount frenzy makes no sense. It's not as if Brits are taking the day off after Thanksgiving. For non-food retailers, the fourth quarter can account for almost half of annual profits, so selling goods they would have probably shifted anyway, but at a reduced price, is pointless. Retail margins aren't exactly bloated in the first place.

In the age of online retail there's even less rationale for offering discounts to lure people into shops. Last year customers turned away from what had become "Black Eye Friday," with battles in shops for cut price TVs.

Blanket discounts invariably means best sellers move faster. But returns can be up to 50 percent, as people buying for themselves purchase several sizes of a garment to work out the best fit at home, and return the rest over the next three to four weeks.

The time it takes to get stock back on the shelves or available online means they won't be there before Christmas, and will end up in bargain bins after the holiday. That's a big loss of potential profit.

This year, a band of retailers have decided to ditch Black Friday altogether. These include Wal-Mart Stores Inc."s Asda, an early adopter of the event. About 25 percent fewer chains are participating as of the start of this week, according to Richard Hyman, an independent retail analyst.

But some retailers are going full-throttle, as the threat from Amazon hasn't gone away -- and Gadfly has argued that the period may even represent an opportunity to challenge the giant. Dixons Carphone Plc and J. Sainsbury Plc's Argos all plan for the event long in advance and draw on the support of their big suppliers to provide discounts. Tesco Plc, Britain's biggest retailer, may do the same.

Delivering the goods in Somerfield — Photo: Sludgegulper

Tesco's an example of the cost of Black Friday -- it wants to double profit margins by 2020, and given that they're notoriously thin in categories such as electricals, the mark-downs are still probably ones it could do without.

And even in the U.S., there's already evidence that the event -- at least in physical stores -- has its limits. American electronics, apparel and toy retailers have little choice about whether they should join in -- 15 percent of holiday sales occur during Thanksgiving week, according to the National Retail Federation.

But a recent move to open on Thanksgiving Day didn't make sense for a number of retailers, who weren't attracting the crowds to justify keeping their stores open. Costco Wholesale Corp., Nordstrom Inc. and T.J. Maxx parent TJX Cos. Inc. won't open on Thanksgiving Day. People can order online, anyway.

Black Friday aside, Christmas is likely to be a decent one for U.K. retailers. Neither Brexit nor faster inflation has really hit the shops yet. In fact, the prospect that food and fashion prices could rise next year -- they could climb up to 5 percent -- may encourage some shoppers to buy now before prices go up later.

Conditions in Britain will undoubtedly be more difficult in 2017. So if retailers haven't got their addiction to the discounting drug under control this Black Friday, they need to go into rehab in time for next year.

--With assistance from Gadfly's Shelly Banjo.

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Future

7 Ways The Pandemic May Change The Airline Industry For Good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

Ready for (a different kind of) takeoff?

Carl-Johan Karlsson

It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.

More than a year later today, experts believe that air traffic won't return to normal levels until 2024.


But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:

Cleaner aviation fuel

The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.

While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.

Fees imposed on the airline industry should be funneled into a climate fund.

In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.

Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.

Black-and-white photo of an ariplane shot from below flying across the sky and leaving condensation trails

High-flying ambitions for the sector

Joel & Jasmin Førestbird

Hydrogen and electrification

Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.

One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.

Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.

New aircraft designs

Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.

International first class will be very nearly a thing of the past.

The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.

Aerial view of Rome's Fiumicino airport

Aerial view of Rome's Fiumicino airport

commons.wikimedia.org

Hygiene rankings  

Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.

Smoother check-in

​The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

Data privacy issues

​However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.

Photo of planes at Auckland airport, New Zealand

Auckland Airport, New Zealand

Douglas Bagg

The billion-dollar question: Will we fly less?

At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.

Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.

40% of Swedes intend to travel less

According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.

But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.

At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.

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