Black Friday was once a highlight in the annual calendar for many brands and retailers, but according to a report from Wunderman Thompson Commerce, the overall spend per person during the event is due to fall this year, from £168.18 in 2021 down to £86.06, which was the average in 2020.
Meanwhile, VoucherCodes' annual ‘Shopping for Christmas Report’, which forecasts retail sales and analyses consumer spending habits for the six weeks leading up to Christmas, shared that while retail spend in the UK will rise 3.3% to £84.9bn, this would be due to inflation, as sales volumes will fall by -4.1%.
This report also forecast that general gift spend will fall by -3%.
It appears that the ongoing cost-of-living crisis, rising inflation and debt concerns are all contributing factors for consumers saying they will limit spend this year.
However, this was not shoppers' only concern, as there seem to be issues surrounding Black Friday that need to be addressed by brands and retailers too.
The report from Wunderman Thompson revealed that 56% of consumers believed that Black Friday deals were "misleading" and 47% said they were left disappointed with the offers available during last year’s event.
On this point, Global Head of Consultancy and Innovation at Wunderman Thompson Commerce, Hugh Fletcher, said: “Retailers will simply have to work that much harder to encourage spend this Black Friday amid the cost-of-living crisis and worries over debt.”
Senior Commercial Director at Vouchercodes.co.uk, Michael Brandy, agreed: “Consumers are prioritising buying Christmas presents for immediate family over extended family and friends this year. As makeup, beauty gift sets and bath products are common gifts for these relations, UK consumers will likely be buying fewer of these items this year,” he said.
Brandy said he believed the focus needed to be on: "providing real value for their customers in order to boost cosmetics sales."
"Offering deals, competitive prices, and great customer service are just a few ways to incentivise consumers to shop with your brand this Christmas" he shared.
Christmas shoppers set to favour online marketplaces
However, Wunderman Thompson’s report also revealed that 76% of shoppers said their proportion of Christmas shopping spend online is likely to increase this year, as they plan to search for the best deals, range, speed-of-delivery and convenience offered by large-scale marketplaces, such as Amazon.
Fletcher highlighted that this means there are still opportunities for brands and retailers to run Christmas offers within this space.
“The pressure that will be felt by brands, retailers and marketplaces doesn’t come without opportunity,” he said. “They all now have many more channels at their disposal and must take a wise approach to meet shoppers’ demands. Fusing together deals and discounts across different platforms can offer a foundation to reach millions and on a global scale.”
While MD of online marketplace Fruugo, Tony Preedy, believed that this indicated that it's time for many businesses to rethink their overall strategies on 'Black Friday' discounts. In his view, participating in the event could be “ruinous for many retailers.”
“Indiscriminate use of discounting to drive volume can be detrimental: very few businesses properly calculate the impact on gross margin of reduced prices and the massive growth in units required to keep income stable, never mind growing,” he said.
Consumers may spread the costs
Preedy also said that financial concerns will also probably cause consumers to spread out their Christmas shopping over a longer period of time this year to spread the costs, rather than concentrating all of their spending at one time.
“Customers will shop around, using online search to find the brands they know, and lower priced alternatives they’re willing to try,” he continued. “As the report suggests, shoppers will be increasingly discerning in looking for products via online search, comparing price, availability and delivery times. Therefore, retailers need to focus on optimising their product pages and increasing the visibility of their products.”
Preedy also said that he believed that listing products at full price via marketplaces that excel in cross-border commerce would help retailers generate incremental sales at full margin, thus avoiding the need to sell those units at a discounted price in their domestic market.
“Cosmetics products perform brilliantly on marketplaces; some of Fruugo’s top-performing sellers are specialists in that category. I would urge any cosmetics company looking to expand to use cross-border e-commerce marketplaces as a risk-free way to generate incremental profitable sales,” he said.
