Black Friday: The Consumer Has a Pulse
But don't get too excited.
There are so many hot takes on Black Friday. It’s always either a record-breaking bumper Black Friday or a “bit of a damp squib”. (Can you tell I’ve lived in the UK for half my life?)
My point is that sometimes things are a little more nuanced than that, and Black Friday needs particularly careful interpretation this year. I went on BBC News this morning to discuss how retailers might have fared during one of the most important shopping events of the year.
Note: “might have fared” and that’s because when you do TV at 5:30am on Cyber Monday, you only have a few weekend released surveys to go on (see Nationwide, RetailNext).
This was the first real test of consumer sentiment following the Budget and, based on early data, it’s fair to say that the consumer still has a pulse. Consumers are feeling optimistic about their personal finances. Yes, there is understandable anxiety about the economic outlook (more on that in a sec), but right now they’re feeling confident in their ability to spend and eager to grab a bargain.
Inflation continues to ease (2.3% vs 11.1% two years ago) and wage growth has been resilient. Next year, minimum wage is increasing (a double-edged sword for the industry), and for many households, tax bills will remain unchanged. Having this clarity around personal finances and the late timing of Black Friday (after payday) helped to boost spending over the weekend.
OK, I’ll put down the rose-tinted glasses
Now please don’t interpret that as all being rosy. We won’t get a full picture of Black Friday 2024 for a little while. What we do know is that shoppers scooped up the deals online, rather than in stores, which should come as no surprise.
I also wonder whether Black Friday has lost a little bit of its shine due to:
Drawn out discounts. Black November, I mean Black Friday, started on Halloween this year (Boots, Currys, John Lewis - I’m looking at you). This is the earliest I’ve ever witnessed in my 20 years covering UK retail. Surely promotion fatigue must be setting in by the end of November?
Scepticism. Are retailers offering a genuine discount or are they creating the illusion of a discount by inflating prices in the run-up to the event? Shoppers understand the need for due diligence before buying so impulsively, and while many of us are still relying on Google rather than ChatGPT for this, that’s all going to change in the next few years. AI shopping assistants are coming and they’ll make Black Friday shopping a breeze.
Temu effect. Over the past few years, we’ve witnessed the emergence of new disruptors like Shein, Temu, and TikTok where, let’s face it, every day is Black Friday. Shoppers get the same dopamine hit and they can access these prices 365 days a year. In fact, the German magazine Der Spiegel ran a headline recently accusing these brands of “ruining Black Friday.” Mission accomplished!
I would also include Vinted here. Preloved is booming and, while preloved gifting still might have a way to go, the stigma around buying secondhand is gone. Vinted has been successful because they’re doing something no one else has been able to - marrying up affordability, convenience, and sustainability. It’s a feel-good purchase – you’re saving money and doing your bit for the planet. No Black Friday hangovers here!
Cost headwinds
Retail has experienced its fair share of turbulence over the past five years – Brexit, Covid, cost-of-living crisis. The sector has been incredibly resilient in the face of so much volatility and uncertainty. And just when things were beginning to improve, the Budget wiped out any sense of optimism for 2025. According to BRC, retailers will face up to £7 billion in additional costs next year due to changes in National Insurance contributions, minimum wage (bearing in mind retail is the largest private sector employer and employs many people in part-time and flexible roles so is particularly exposed here), business rates, and a new packaging levy.
I can’t see how these additional costs aren’t passed on to the consumer. It’s the last thing any retailer wants to do, but it’s not realistic to expect retailers to absorb these costs in the timeframe they’ve been given. It will impact investment in both staff and stores, will very likely lead to redundancies and store closures, and some retailers simply won’t be able to survive this.
So, in summary, a very mixed picture but I think one thing we can agree on right now is that consumers are feeling more cheerful than retailers. This might be short-term sentiment but certainly something the industry will look to capitalise on during this critical trading period.