Big-ticket buys expected to drive Black Friday weekend ahead of 2024 GST hike
Department stores across the island are pulling out all the stops to woo customers at the biggest festive retail event of the year.
Black Friday traditionally signals the beginning of the festive period – from Black Friday on Nov 24 to Cyber Monday on Nov 27 – when stores offer generous discounts on big-ticket items such as air-conditioners and home furnishings in the lead-up to Christmas.
Despite rising prices and a global economic slowdown, Singapore’s retail sector appears to be holding up well.
According to figures released in September by the Department of Statistics, department stores recorded growth of 0.8 per cent for the same period compared with 2022, as well as seasonal (month-on-month) growth of 2.4 per cent.
On a year-on-year basis, retail sales increased 0.6 per cent in September. Market analysts also expect retail performance to accelerate in 2024 as international visitor arrivals, consumer spending power and GDP growth improve.
A check by The Straits Times with 13 major department stores in Singapore showed that retailers expect demand to hit a high during the Black Friday weekend, ahead of the next goods and services tax (GST) hike.
On Jan 1, 2024, the GST rate will go up from 8 to 9 per cent, the second of a two-stage rate hike which started on Jan 1, 2023.
To cushion sticker shock, stores are curating merchandise that appeals to shoppers and ramping up in-store promotions, such as exclusive deals, gifts with purchases and rebates for members.
Metro department store’s chief operating officer Erwin Wuysang-Oei anticipates a strong showing for the Black Friday weekend.
It is Metro’s premier event of the year, featuring exclusive deals at its stores in Paragon in Orchard Road and Causeway Point in Woodlands for merchandise “meticulously curated and prepared for this occasion”.
“We approach this event with a blend of caution and optimism, urging shoppers to proactively navigate the impending GST hike and make meaningful purchases this Black Friday,” says Mr Wuysang-Oei, who has observed that Metro shoppers look for deals both online and in physical stores throughout the year.
“Our strategic focus is on delivering products that accentuate superior design, quality and excellent value,” he adds.
At Ngee Ann City in Orchard Road, Japanese retail giant Takashimaya Department Store is showcasing more than 300 brands in its Black Friday weekend, with discounts of up to 70 per cent on a range of toys, home decor and Christmas hampers.
“We are definitely upbeat about this Black Friday weekend and have added an additional tier of retail entertainment with our Spin-and-Win lucky draw, featuring $30,000 worth of prizes as well as hotel dining vouchers,” says its spokesperson.
She says she wanted to avoid the 2024 GST hike, similar to what she did ahead of the 2023 hike.
“I bought the more expensive items such as designer wear on Black Friday last year, and it was worth it. I’m doing the same thing this year,” says the 38-year-old.
Another Takashimaya shopper, housewife Leena Chia, bought two bags’ worth of apparel from American label DKNY at a 70 per cent discount.
“I buy things that I like, and the GST hike does not affect my purchasing decisions,” says Ms Chia, 56, who was there with her husband. “Who can resist designer clothes when they are on sale?”
Meanwhile, home-grown electronics and electrical retail chain Gain City is expecting an 80 per cent surge in demand across both its physical stores and Web store.
It attributes the heightened demand to discounts on a variety of products such as air-conditioning units, audiovisual equipment, bedding and furnishings.
And Gain City shoppers can buy a king-size bed set for the price of a single bed, as part of the company’s Black Friday Weekend Triple Upsize promotion.
Ms Candy Cao, marketing director at Gain City, says that despite challenges posed by the GST hikes, sales at its 11 physical stores islandwide as well as on its Web store (gaincity.com) have remained robust.
“We saw a significant surge in customer engagement and sales ahead of the Black Friday weekend,” she says. “We have noticed a trend over the last few years where shoppers are strategically saving up for significant purchases on Black Friday.
“Our customers, especially new home owners and resale flat buyers, have recently bagged gifts valued up to $2,578 with bulk purchases in a single transaction.”
The palpable festive buzz in stores may be influenced by factors beyond the GST hikes, says Dr Samer Elhajjar, a senior lecturer at the National University of Singapore Business School’s Department of Marketing.
Shoppers are driven by other economic indicators, such as employment rates, disposable income levels and overall economic stability.
“If factors such as employment rates and disposable income remain positive, we might not mind the higher taxes as much, especially if there are enticing store discounts,” says Dr Elhajjar.
“The fact that the retail business is doing well could be a sign that people are feeling confident about the economy. When people are optimistic about their finances and the economy, they are more likely to keep on spending, which helps balance the negative effects of GST hikes,” he adds.
Another plus is the advertising blitz by department stores in newspapers and online, which Dr Elhajjar says contributes significantly to this resilience, mitigating the impact of the GST hikes and boosting sales by raising product awareness.
He says promotions and limited-time purchases generate excitement and anticipation, building a sense of exclusivity and urgency around the Black Friday weekend.
“If stores can convince customers of product value through quality, exclusivity or promotions, then customers might not mind the higher prices. Other perks such as in-store lucky draws and pop-ups in mall atriums are also effective in encouraging impulse purchases.
“These on-site, shopper-centric activities add a whole other layer of experiences that online shopping cannot replicate.”
Entrepreneur Dennis Koh hopes to get a new refrigerator for his home this weekend. The 51-year-old businessman in the fashion and styling industry has been looking for a replacement for his clunky 10-year-old refrigerator since June.
“The year-end is when stores are eager to clear their merchandise so that they do not end up with unsold inventory,” says Mr Koh, who worked in a production and retail company in the 1980s before starting his own business in 1997.
“I don’t want to wait another year after the 9 per cent GST kicks in,” adds the father of three teenagers.
“The savings I get from buying now can be put to good use, such as having a restaurant outing with my family.”