Written by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
Retailers are desperate for some spending cheer but the worry is that it could turn out to be more of a Bleak Friday. With the promotional event taking place amid the cost-of-living storm, could consumers stay more cautious about splashing the cash.
Shoppers are expected to be out in force searching for bargains over the next few days, particularly with so many saying they are spreading the cost of Christmas by starting early. According to an Opinium survey for HL more than three quarters of us said we’d buy Christmas presents in the sales this year (77%), and 13% will do so for the first time this Christmas.*
On the face of it, spending in the UK is still expected to increase by around 0.8% to hit £7.8 billion over the weekend, including Black Friday and Cyber Monday, according to Global Data research for vouchercodes.co.uk. But that headline figure masks the impact of inflation on volumes. Creeping prices mean that we may put fewer items into trollies and virtual baskets.
The latest snapshot of the retail market from the ONS shows that many more people are turning to charity shops and auction houses to try and find deals, rather than buying brand new goods. This search for second-hand bargains is likely to eat into sales, especially with the might of e-Bay promoting pre-loved ranges over products which have just rolled out of factories.
Overall retail sales volumes are still below pre-pandemic times and now with more money set to be taken out of the economy due to tax increases, consumers are likely to be even more cautious about going on spending sprees, worried about how squeezed budgets will be in the New Year. Bringing vintage items in to jostle alongside latest trends might help retailers unlock potential new customers, inspired by sustainability and driven by thrift.
Even so, Amazon is still expected to be the most clicked on site this year, with Currys, Argos and John Lewis also luring customers in with deals on electrical goods in particular. Although supply chain issues have eased and more tech products are likely to be lying in wait on shelves and warehouses, spending is still likely to be subdued given lots of purchases of big-ticket items like TVs were brought forward during lockdowns.
Retailers offering the best shopping experiences may prove to be more resilient, with many more customers expected to hit the high streets and retail parks this year, rather than surfing stores from the sofa. Springboard expects footfall to come in 12.8% higher this Black Friday, compared to last, when worries about Covid outbreaks were still rife. However, those seriously strapped for cash may ignore the promotion completely especially with signs that many shoppers are cutting back on Christmas expenditure. Deals on products which could help save on bills or keep shoppers warm may be among the most popular this year with blanket garments known as snuddies, air fryers and electric blankets topping best buy lists.