Recent studies on consumer behavior in the UK suggest a lackluster beginning to the Golden Quarter, impacting retailers in the crucial year-end period. Two key reports, the monthly Barclays consumer spending analysis and the British Retail Consortium-KPMG retail spending report, underscore a trend of cautious spending likely to persist through Q4.
In Barclays’ findings, November’s YoY card spending increased by 2.9%, trailing the inflation rate of 4.7%. While clothing and department store spending showed positive growth, extended Black Friday sales appeared to dampen the actual Black Friday transactions, down by 0.6%.
According to the BRC-KPMG report, total retail sales in November increased by 2.7%, falling short of the 4.2% growth recorded in the same period in 2022. Non-food sales saw a decline of 1.6% over the three months to November, with both in-store and online non-food sales dropping in November.
The reports indicate a notable consumer shift towards actively seeking discounts and deals due to rising costs, with 59% of consumers adopting this approach. Loyalty programs and online discount code searches have become prevalent methods for consumers seeking savings.
Helen Dickinson OBE, Chief Executive of the British Retail Consortium, noted that while Black Friday’s early start had the desired initial effect, it failed to maintain momentum throughout the month. Paul Martin, UK Head of Retail at KPMG, highlighted weak sales growth, attributing it to the ongoing cost-of-living crisis affecting Christmas spending.
As challenging economic conditions persist, retailers may resort to prolonged and targeted discounting, potentially impacting margins and leading to further sector challenges.