Many shoppers say they plan to spend less this Black Friday as the cost of living bites.
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Black Friday offers a chance to shop ahead of the festive season, but retailers are expected to cut prices further this year as many shoppers tighten their belts amid a worsening cost-of-living crisis.
Shoppers in Europe plan to spend nearly a fifth less during this year’s off-price season as inflationary pressures weigh on consumer sentiment, according to research this month by the Boston Consulting Group.
UK consumers plan to cut back by the biggest margin in the region, with those in France and Germany both planning to cut their spending by 15 percent and Spain by 13 percent.
In a survey of nine countries, including Australia, US consumers alone said they expected to spend more this year, increasing their spending by 6%.
Retailers are under pressure.
The findings come as the global economic outlook darkens, particularly in Europe, where Russia’s invasion of Ukraine has weighed on growth and soaring energy prices.
The UK is in recession, the country’s independent Office for Budgetary Responsibility confirmed last week.
This has added pressure on retailers struggling to recover from the Covid-19 slowdown and wooing low-cost consumers. Meanwhile, many companies are scrambling to correct deficiencies and supply issues from last year, and have built up large inventories that they are now being forced to turn around.
“Black Friday is a critical moment in the shopping calendar for physical and online retailers who are still recovering from the Covid pandemic and now face consumers in many markets who are scaling back their spending plans on essential items,” said Jessica Distler, managing director and partner, BCG.
This allows retailers to increase their discounts every month, increasing purchasing opportunities for consumers with money to spend.
Increased risk of shopping fraud
UK transactions rose 3.8% year-on-year in the week leading up to Black Friday, according to new data from Barclays Payments, one of the country’s leading payment processors.
Kristy Morris, managing director of commercial solutions at Barclays Payments, told CNBC Thursday that shoppers may be more inclined to spread out their purchases over the Christmas season.
“What we’ve seen is that the Black Friday trend is spreading. It’s spreading throughout the week and actually extending into months,” Morris said.
“Some are likely to be shopping at Christmas and consumers are looking to better understand how they spend for Christmas,” she added.
However, experts urge shoppers to be careful when looking to take advantage of discounts this festive season.
John Davis, UK and Ireland director of cyber security organization Sans Institute, said online hackers were known to “heat up” during discount periods, especially when shoppers are under pressure to get a deal.
According to Barclays research, shopping fraud rose by 34% after the Black Friday and Cyber Monday weekend last year.
“Cybercriminals are more prevalent than ever; We are upgrading with more sophisticated and harder-to-detect attacks,” he said.
Davis urged consumers to be extra cautious when shopping online, and to avoid making hasty or panic decisions out of “fear of missing out.”
“Opportunistic hackers will try to create a false impression; Therefore, be aware of fraud. It’s important to be cautious by trusting gut instinct and building security into all our online behavior,” he said.