With two thirds of UK retailers now saying that this year’s Black Friday will be make or break for their businesses, the pressure is on. While consumer spending in the UK is certainly down, just how down its going to be over the Christmas period remains to be seen.
While the economy did shrink in the last quarter, according to government figures, it dropped by 0.2%, not the “at least 0.5%” that the Bank of England predicted two weeks ago. And this also includes a relatively large drop in GDP of 0.6% in September as a direct result of the bank holidays around the Queen’s funeral.
So, while things are looking pretty grim, there is a chance that they may not be as grim as predicted – not yet anyway. Every year, there is a wave of fear that Christmas peak sales won’t match up to what is needed. Every year they somehow scrape by.
I think this year will be the same – so long as retailers offer shoppers what they want. And that appears to be value-for-money above all else. Two studies out this week suggest that, firstly, consumers are ditching a drive for sustainable and green options in favour of price and, secondly, that price and value are now the key drivers for shoppers.
This naturally means that, firstly, retailers need to shift their messaging to focus on the value of what they sell, as opposed to pretty much any other factor, and secondly, that Black Friday, based around bargains, is perhaps even more key to not just selling in November, but kick-starting the whole avalanche of Christmas shopping.
Many retailers have already seen this coming – hence why Black Friday is now seen as make or break time – but others are being more sneaky. Some, a study has found, are already slowly rising prices so that, come Black Friday, they can appear to be making large cuts, when in fact they are preserving margin.
This may appear harsh, but one can easily understand the drivers for it. And let’s not forget, consumers can be just as disingenuous. Growing numbers of them are scamming online retailers to save money and to get free goods. In fact, a study this week points to as many as a third of consumers admitting that they have falsely claimed that an ecommerce order was not satisfactory in an attempt to get it for free.
Longer term, beyond the Christmas peak, retailers need to also be looking elsewhere for sales. While Christmas may well not be as awful as predicted, January could well be when the real downturn hits. Turning to export markets is perhaps the only way that many brands and retailers are going to find real growth in the first half of 2023. Indeed, data suggests that there is a £9bn growth opportunity for online exports and even Brexit may not stand in the way of making this growth happen. As the UK’s political class continue to bicker about Brexit, tech companies have been working on solutions that can help automate and ameliorate the pain of Brexit paperwork, making it, slowly but surely, less difficult to sell into Europe.
This may yet be the fillip needed by retailers and brands as they look to grow – or at least arrest decline – in the new year ahead.