We’re getting a deluge of reports about whether the Black Friday and Christmas shopping period this year will be good, bad or indifferent and many of them seem contradictory. But one strand that’s running through all of them is that consumers are laser-focused on bargains. 

That’s also clear from the latest EY UK Future Consumer Index, which was released on Monday and said that “deal savvy” UK consumers are offering up some hope to retailers ahead of Christmas.

Nearly half (45%) of UK shoppers are planning to to take part in Black Friday shopping this year, and in fact, 65% of shoppers have been delaying purchases until this particular event.

And while plenty of reports have suggested that physical shopping will be a big factor in this year’s festive season, EY said “online presence will be critical this year, with 64% of UK consumers planning on searching online for deals, up from 41% last year”.

Silvia Rindone, EY UK&I Retail Lead, said of that fact: “While we’re not likely to see a return of the acceleration of growth in online that we witnessed during the pandemic, it remains a key channel for consumers. Getting omnichannel offers right – like click & collect, or in-store returns will be a key driver for retailers having a successful festive season this year.”

Cautious millennials

So what about all those studies showing consumers cutting back? EY found evidence of this too, and said 35% of UK consumers expect to spend less over the upcoming festive season than in previous years.

Its findings were produced using a survey of 1,000 UK consumers, and as this is the 13th edition of the study, it has a wealth of previous years’ data for comparison.

It added that millennials (26-41 year-olds) “are cutting back on spending more than other demographics this festive season as rising living costs continue to take their toll”.

Some 40% of millennials planning on spending less this year, compared with 27% of shoppers over the age of 58.

Ongoing concerns about cost of living are “continuing to shape attitudes”, with 87% worried about energy, water and heating costs. Clearly, while inflation may be coming down fast, more than a year of rapid price increases is still taking its toll on consumers, and even if inflation gets to the 2% target figure, shoppers are still faced with prices significantly higher than they were just a few years ago.

Financial pressures are particularly acute for younger shoppers (under 41s), with 59% concerned about rising interest rates, compared to a quarter of shoppers aged 42 and older. That’s unsurprising given that those younger consumers are those whose mortgages are most likely to be fairly fresh with quite a few decades ahead of them.

Tough time for fashion?

The worst news for fashion and other non-essentials retailers is that shoppers are continuing to cut back on discretionary spend with over half of consumers (51%) planning to spend less on big-ticket items, and 43% cutting back on clothing and footwear. 

However, there’s a bright spot in there with “room in household budgets for small treats” as 18% are planning on spending more on “luxuries and small indulgences”. So, thumbs up for the lipstick effect?

Silvia Rindone added: “After another challenging year… consumers are investing more time in looking for value for money and conducting much more research before buying. Shoppers are becoming savvier of when to buy, maximising spend during sales events such as Black Friday and Cyber Monday. With the ‘golden shopping quarter’ becoming more polarised around these events, brands and retailers need to carefully plan their promotions this year in order to capture the consumer – too early and shoppers will delay in anticipation of further discounts; too late and the moment will be lost.

“We’re also seeing differences emerge in spending appetite between younger and older consumers. With inflation, high rents and increased mortgages impacting younger age groups, these shoppers are being more cautious with spending. Retailers and brands will need to consider carefully how to win these consumers over.”