Black Friday Predictions

In September, UK consumer confidence dropped for the first time in six months. Most likely driven by concerns surrounding the government budget scheduled for the end of the month. The most significant decline in the index was in forward-looking outlooks on consumers’ personal financial situations and the overall economy in the next year. However, retail sales volumes have been on an improved trajectory since the start of the year. And in September, were 4% ahead of the same time last year. 

So, what does this all mean for one of the largest shopping events of the year, Black Friday? Last year, retailers stretched their promotional campaigns throughout most of November, hoping to encourage consumer spending after what had been a financially challenging year for many. And despite relatively low levels of intention to participate in the event, according to Global Data, actual engagement was much higher. This year, Global Data anticipates participation could rise as high as 62%, up from 55% in 2023.

Figure 1: GfK Consumer Confidence Barometer

Figure 2: ONS All Retail (excl fuel) sales volumes

Who is most likely to be participating?

Gen Z looks set to lead the charge on Black Friday shopping, with 68% indicating their intent to participate. Not only is this shopper group focused on keeping up with the latest trends, but their online engagement also increases the opportunity for occupiers to provide targeted add campaigns. The fashion sector stands to see a significant boost in performance from this generation, with two thirds of students intending to make a fashion purchase, according to student platform UNiDAYS. 

Over half of Gen Z state that the cost of living is a concern. While this makes Black Friday deals more attractive, it can also make them more intentional. This presents an opportunity for retailers through promotion previews and including online wish-list functions. Additionally, “buy now, pay later” services (BNPL) that offer spreading the cost of purchases over time have become increasingly popular amongst younger consumers. The most-used BNPL UK service, Klarna, reports that 70% of their customers are Gen Z or Millennials. Such services offer flexibility and incentivise consumers to spend, particularly on big-ticket items such as technology purchased during Black Friday. 

Which product categories will be most in demand?

While Gen Z are predicted to be the front-running consumers, the electrical and technology sector is expected to continue to dominate Black Friday sales. At the same time as headline consumer confidence falling, the likelihood of consumers making major purchases also weakened. Consumers are now likely to hold out for discounts on big ticket item purchases such as laptops, smartphones, and TVs, as well as discounts on essential household electrical appliances. Online sales account for a significant proportion of the technology sales due to convenience (especially for larger items) and the variety offered by online platforms. However, in-store retailers can offer personalised services, such as providing support and knowledge to consumers wanting to find out more about the gadget. For example, EE’s Westfield Studio store has dedicated experience zones which offer demonstrations and helps customers make informed purchasing decisions. Since the launch of this concept, footfall at the Westfield store has more than doubled. Clothing & footwear, and health and beauty have also become increasingly attractive product categories for consumers to purchase during the Black Friday promotional period. Likely boosted by social media influencer promotional campaigns. 

Despite confidence being hit by the highly anticipated Budget on 30 October, consumer spending continues to see modest year-on-year improvements. And with this in mind, Black Friday looks set to kick-off an altogether cheerier Christmas trading period for the retail sector.