Should retailers prepare for a late shopping surge?
This year’s Golden Quarter was always going to be tough for retailers. With consumer sentiment at its lowest Autumn figure for five years and a late Black Friday leaving fewer days between the Black Friday weekend and Christmas, customers were braced to tighten belts and reduce spending. The additional difficulties of three Brexit deadlines have encouraged retailer stockpiling throughout the year, the December election distracted consumers and poor weather in Autumn impacted footfall.
Retailers were going to struggle to tailor promotional calendars for this Golden Quarter, particularly with the need to balance polarised consumer interest in Black Friday. However, only the strongest of brands (or bravest of retailers) can avoid Black Friday or Christmas promotions entirely and wait for the Boxing Day sales. Retailers needed to embrace promotional activity but protect margins by returning to full price for the two critical weekends between Black Friday and Christmas.
So, how did they do?
The timing of Black Friday this year led to record sales online, impressive figures on the high street and increased footfall in shopping centres.
Despite its late timing - and stock and trading challenges we described - most retailers were restrained in the run-up to Black Friday weekend. Many were not on promotion two weeks before, with only 29% of store retailers on promotion and 40% online. Promotions then ramped up at the start of the Black Friday week and peaked on the day (75% stores and 88% online).
Fashion retailers promoted more heavily than others, with 87% in-store (vs 75% average) and 91% online (vs 88% average). This likely reflected the need to dispose of high stock levels remaining from weaker Autumn trading.
Despite a lull in promotional activity, retailers still have a lot of stock after a disappointing Autumn. This week will be a waiting game between retailers and shoppers as to whether that stock will be discounted before or after Christmas. As in previous years, we’re seeing the number of retailers on promotion starting to creep up after the restraint following the Black Friday weekend.
With the election over, last weekend should have had fewer distractions for consumers. However, the unsettled weather would have put a dent into footfall for many high streets.
Promotional levels two weeks after Black Friday are almost identical to 2018, in-store (43% in both 2018 and 2019) and online (53% in 2018, 56% in 2019), and significantly lower than in previous years. With one less trading week before Christmas this year, retailers have less time to clear seasonal stock and will be under pressure to discount more widely this week.
With that in mind, we expect to see even higher promotional levels this weekend compared to previous years. We’re also expecting a bumper Boxing Day sale, with significant discounts for patient consumers. This is unusual compared to recent years when the pick of the bargains might have been snapped up before Christmas.
“We’re seeing retailers wise up in their promotional activity, particularly after Black Friday where a number went back to full price and introduced newness to entice shoppers, which has helped protect margins. It’ll be interesting to see whether retailers hold their nerve and remain at full price until the Boxing Day sales, although we are expecting more pre-Christmas promotions to creep in.”
Surveyed every Monday in November and December
Sample of 118 stores on Oxford Street and 167 retailers online, undertaken by PwC teams in London and Northern Ireland respectively
‘Promotions’ defined as a discount off some or all products in the store, and advertised on the storefront or internet landing page
Excludes ‘everyday’ promotions such as student/club discounts, newsletter sign-up discount, free delivery, year-round clearance rail not advertised on storefront, etc
Also excludes email, newsletter, voucher code and member-only promotions
We have been tracking in-store promotions every Monday since 2010, predating Black Friday in the UK
We have been tracking online promotions by this methodology since 2016
This year, we have added an additional survey on Black Friday (Friday 29 November 2019)
For consistency, historical year-on-year comparisons for 'Black Friday' have been made using Cyber Monday (2 December 2019). In practice, there is little difference in promotional levels between Black Friday and Cyber Monday, although a small number of physical stores only promoted on Black Friday and not Cyber Monday