‘Greater discounting drove Black Friday sales for retailers getting the balance right’

It is no secret that customers look for value when they shop. But as the cost-of-living crisis chips away at consumer spending power, the perception of value is shifting. 

Our recent survey revealed that the key value attributes of ‘quality’ and ‘cost’ were consistently the most important factors for all consumers, with cost becoming more important in the current environment.

With inflation hitting 11.1% in the year to October and consumers feeling the squeeze, many are expected to reduce festive spending on presents and parties in an effort to save money.

In response, some retailers are limiting price increases on everyday purchases, while selectively using promotions on surplus inventory and seasonal items, including holiday products, to manage customer perception and clear out excess stock. 

As customers’ value perception becomes more sensitive, it is changing how they engage with Sales and discount events. But how successful have retailers been in responding to this shift – and have they sacrificed Christmas sales by discounting too early?

Black Friday success?

On the face of it, the most recent Black Friday was encouraging for retailers. Shoppers were said to be defying the cost-of-living crisis to snap up deals.

Barclaycard Payments – the processor of around £1 in every £3 spent on credit and debit cards in the UK – said transactions edged up 3.59% versus last year, and on Cyber Monday they were up 5% compared to the same point in 2021.

Nationwide also said Black Friday was its “busiest day on record”, reporting the number of purchases as 10% higher than on Black Friday 2021 and up 40% on 2020. The level of spending was also up 36% on pre-pandemic levels.

In a surprising twist, the high street appears to have been the prime beneficiary of Black Friday as shoppers shunned online in favour of physical stores. Footfall across all retail destinations was up 9.2% on last year and 12.4% above last Black Friday, according to Springboard. Crucially, it was still 19.1% lower than on Black Friday in 2019, and the Office for National Statistics reported that November’s sales dipped 0.4% overall.

Behind the figures 

If we delve deeper into the figures, it is clear that greater discounting has helped to drive sales this Black Friday. Inventory has been a sticking point for many retailers, with several having not sold seasonal goods during the second and third quarters, resulting in a significant rollover stock during the winter months. 

A report by inventory software firm Unleashed said UK clothing and fashion businesses are holding 57% more stock compared to pre-pandemic levels. This meant offers were launched earlier than usual with heavier discounting and including high-quality products. 

Boots – which offered its biggest Black Friday ever this year with more than 18,000 promotions – had more than three orders every second online and noted that all its bestsellers were heavily discounted, showing customers took advantage of more substantial savings. 

“Cost-focused consumers have shown the reductions need to be significant to lure them in”

While the data shows consumers are planning to reduce spending this Christmas, Black Friday continued to be a key moment for purchasing gifts, particularly those with heavy discounts, according to the retailer.

The quest for value and the popularity of deals also had an impact on credit usage. Currys noted more people were buying on credit or using buy now pay later schemes this year, a sign that while customers are more concerned over their finances in the future compared with 2021, they are still keen to pull the trigger when an offer resembling good value appears. 

One thing is clear: December will prove to be crucial for many retail businesses and will tell whether Black Friday was a final footfall surge for consumers before a final, deep round of discounts in the run-up to Christmas and whether the retailers that introduced more substantial discounts have brought forward their December sales by doing so. 

Cost-focused consumers have shown the reductions need to be significant to lure them in this time around and retailers need to clear inventory while managing margin. 

Managing value perceptions and profitability is a tough balancing act and we expect winners and losers to emerge as Christmas trading statements are released.