Retailers are beginning holiday promotions earlier and cost-of-living headwinds likely to be behind the fall in transactions.
Susannah Streeter, head of money and markets, Hargreaves Lansdown, said: “Despite retailers’ best efforts jamming inboxes full of promotions and offering in-store deals, Black Friday is likely to have left them feeling a little blue. Transaction volumes have fallen back by 0.6% compared to last year, according to Barclaycard. Given how deep many discounts are likely to have been, margins are likely to have taken a hit. There is a chance that more bargain hunting activity in the lead up to the big weekend will have buoyed sales overall. But shoppers are clearly highly vigilant on price. Retailers offering discounts need to shift more to stay paddling ahead.
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Cost-of-living pressures come to the fore
As cost-of-living pressures continue to weigh on household budgets, shoppers are inevitably being more cautious. It’s likely that these bargain hunting trends are likely to have continued into Cyber Monday spending patterns.
“If volumes overall do disappoint retailers might have to keep ploughing on with discounts which would hurt.
Consumers may well have channelled a lot of their shopping activity into the promotional period. So the worry will be that the weeks to follow will be thinner on the ground. A more hesitant trend has already shown up in the last retail sales figures. They showed volumes were 2.7% down year-on-year in October, reaching the lowest level since the February 2021 lockdowns. There may be pockets of strength in the weeks ahead, particularly in city centre areas where consumer can combine shopping and socialising, but while consumer confidence has improved a little, it’s clear that many people are still wary of spending big amid an uncertain economic outlook.”
Black Friday discounts rise from 23% to 34%: Square
Meantime, Square agrees that there are bigger discounts in the market than last year. Square reports an average discount this year of 34%, compared to 23% last year. But its numbers suggest that consumer spending rose this Black Friday weekend. According to Square, UK consumers spent $143m this year compared to $122m in 2022.
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By GlobalDataAs for BNPL use, it says that 592,750 customers used BNPL to finance Black Friday shopping, compared to 410,955 in 2022.
