What: Inflation is pinching custolmers’ morale in the UK.

Why it is important: Retailers are faced with the dilemma to offload their stocks at the expense of their margins, or to lose customers.

UK consumer spending on gifts and festivities is projected to decrease, with PwC estimating a fall from £23bn in 2022 to £20bn this year. There's a notable divergence in consumer confidence across age groups and income levels.

Retailers have also adapted to changing consumer behavior, noticing customers making more considered purchases and seeking greater value. Despite offering significant discounts, interest in Black Friday has waned, with PwC reporting a drop in consumer interest from 61% in 2022 to 44% in 2023. This decline is partly attributed to consumers spreading out their savings over the year and growing skepticism about the real value of Black Friday deals.

However, there's a slight improvement in consumer confidence in November, despite ongoing cost of living concerns. Analysts expect certain retail categories, like groceries, to perform better than others during the festive season. Online retailers offering a wide range of deals are predicted to remain popular among consumers. eBay UK has observed that shoppers are becoming savvier, selling items to fund their Christmas purchases and showing interest in refurbished products from well-known brands as a cost-effective alternative to buying new.

UK retailers increase Black Friday discounts while customers cut spending