According to the latest data from the Centre for Economics and Business Research (Cebr), households will be cutting their spending by as much as £1.5bn in the final three months of the year — a real consumption expenditure fall of 0.6%.
Black Friday was brought over to the UK by US retailers in the early 2010s as a way to kickstart Christmas retail spending. Its popularity has increased to become an established part of the UK retail sales calendar.
However, a reduction in overall spend during the fourth quarter will mean a weak year for Black Friday sales in 2022, in the midst of Royal Mail strikes, with January sales starting early in an attempt to shift stock.
This year in particular, shops have built up high levels of inventories to deal with supply chain issues that have been present since the COVID pandemic. In the first half of 2022, retail inventories rose by more than £6.3bn, compared to a £1.6bn rise in the first half of 2021.
There have also been a rising number of insolvencies in the retail sector this year as customers rein in their spending.
Wholesale and retail sector insolvencies were 38% higher in Q3 2022 than the same quarter in 2019, according to data from the Insolvency Service.
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The combined value of November and December retail sales, excluding automotive fuel, increased by 42% between 2011 and 2021, which is roughly in line with the 39% increase in retail sales values for the other ten months of the year, the Cebr said.
Retail sales volumes reveal the same trend, with November and December sales standing 31% higher in 2021 than 2011, and sales for the rest of the year rising by a cumulative 30%.
“For this year’s Black Friday, we expect the same trend of sales rising in the last week of November, though the cost of living crisis looks set to have an impact,” said Cebr.
Some 42% of Brits have reported shopping around more due to the rising cost of living, with 65% admitting they are spending less on non-essentials amid inflationary cost pressures.
Cebr’s Asda income tracker which monitors changes in discretionary incomes, showed that households had £36 a week less to spend on non-essentials in October compared to a year ago on average. Those with the lowest incomes even have negative discretionary incomes.
The economic consultancy added that it expects an expenditure contraction in the first and second quarters of next year also.