Does Black Friday actually deliver ‘new’ and profitable sales for retailers, or does it simply move discounted orders into November, cannibalising the once most profitable month of December, taking it from peak hero to damp squib ?
The Office for National Statistics (ONS) acknowledged the move to earlier shopping in its latest report which will have come as no surprise to our readers whose businesses have seen peak trading become increasingly less profitable over the past few years.
The ONS says that retail sales fell by 3.2 per cent, with non-food categories down by 3.9 per cent in December. Why? Consumers exercised caution, pulled back their spending, cut out the frivolous, and had shopped across the year for the festive season, including Black Friday, for the best deals. In particular, the ONS highlighted sluggish demand across department stores, clothing shops, and household goods.
It is not just the trading month of December we should be concerned about, more a trading trend that is seeing more of our customers starting to deeply consider whether they really need, or could actually do without, all but the essentials. The aftermath of an over-reliance on BNPL and credit cards has also come to roost, with younger consumers particularly impacted as they struggle to pay off their debts.
The fact is that consumers are, generally, becoming more prudent – not just in the UK, but around the world. Mindful of rising costs for food, energy, travel, insurance etc, they are making the choice to buy far fewer non-essentials.
With prices now set to rise again as the impact of the Red Sea shipping attacks forces punitive changes to shipping routes, retailers are going to find it harder than ever not to pass these increases in costs on to consumers.
Phil Monkhouse, UK country manager at financial services firm Ebury, commented: “The Grinch reared its head over the festive period to deliver an unsatisfactory Christmas for retailers.
“Households still reeling from the cost-of-living crisis and soaring mortgage rates decided against opening the purse strings this December and turned away from the usual Christmas splurge.
“Global general elections, recession fears and economic volatility stemming from market expectations of rate cuts are setting retailers up for a rocky 2024 so preparation and agility will be key.”
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