FTI Consumer Industries Snapshot – Black Friday 2021

Discussion Drivers

Initial predictions were for a relatively low-key Black Friday (The Times), but this year’s seasonal retail event may have exceeded expectations, according to Global Data, who following a flurry of bargain-hunting on Friday, forecast sales of £9.15 billion for the four days of Black Friday through Cyber Monday (Reuters). Moreover, Barclaycard and Nationwide reported that the volume of purchases on Black Friday increased by 24% and 26% respectively in comparison to 2020 (The Guardian), albeit the IMRG Capgemini Online Retail Index painted a bleaker picture, finding online retail sales across 200 retailers declined -14.3% versus last year’s locked-down Black Friday (Retail Times). Meanwhile, a marked increase in visits to physical retail stores versus the prior week, according to Springboard and IMRG data, was hailed as “very positive” for bricks and mortar retailers, although unsurprisingly footfall was still 24.2% below 2019 levels (Retail Week) and high street footfall was impacted by a combination of inclement weather and consumers working-from-home (Sky News).

Against a backdrop of ongoing supply chain and labour shortage issues, Black Friday was considered a “test run” for retailers’ Golden Quarter; many discounted throughout November in a bid to bring forward Christmas transactions without the challenges of a sudden demand spike, and consumers have been buying earlier, “worried they won’t get the presents they want if they leave it until the last minute” (BBC). With this context, and some shifting perspectives towards Black Friday including sustainability and independent retailers  citing “tight margins, lack of space to store excess stock, ethical values and lack of interest from their customer base” (Drapers), there was a “notable dip” in Black Friday deals being offered last week – and an emerging trend for discounts to be limited to retail brands’ loyalty card members (Retail Week).

Consumer affairs topics were visible in reporting, including in datapoints indicating that businesses’ rising production costs were being passed onto consumers via higher priced products compared to early summer (The Guardian) and separately, around the annual Which? analysis of product pricing on Black Friday (Sky News). Alongside this, there has been interest in the use of credit and the rise of shoppers turning to “buy now, pay later” (BNPL) services. Klarna reported that more than 17 million people in the UK had used its services, with this figure more than doubling since 2020. Similarly, a Citizens Advice survey found almost one in ten people planned to use BNPL to help with Christmas shopping (BBC). Additionally, The Independent cautioned that “credit levels have already started rising” ahead of the usual January peak, citing data from the Bank of England reporting £600m of spending on credit cards in October, which was the highest monthly amount since July 2020.

Striking Statistics

• There was record spending in the UK on Black Friday, according to data from Barclaycard Payments, with transactions up 23% between midnight and 5pm compared with 2020, when most of the UK high street was in lockdown, and transactions up 2.4% on 2019. (Financial Times)
• Barclaycard Payments data also found an even greater increase on pre-pandemic activity for Cyber Monday spending, recording a 4.5% increase on 2019 payments for the same period and a 16.7% increase on 2020. (Retail Week)
• Data from IMRG suggested there were 196 Black Friday campaigns live on Black Friday itself; 24 fewer than on the same day last year. (Retail Week)
• Research commissioned by eBay ahead of Black Friday found that 66% of UK consumers planned to shop from small businesses and 30% intended to sell unwanted items, as an opportunity to sell as well as to buy. (Retail Week)
• According to the Confederation of British Industry (CBI), the balance of firms passing on rising production costs moved up from +16 in May to +77 in November, marking the highest level recorded by the sales barometer since 1991; earlier in November, the Office for National Statistics reported consumer prices index inflation had risen 4.2% over the year to October and the Bank of England said it was heading to 5% next year. (The Guardian)
• For some context on Black Friday across the pond in the U.S.A, the consumer insights team at McKinsey found 31% of respondents had already completed at least three-quarters of their “holiday shopping” by early October, partly citing supply concerns. Meanwhile, almost two-thirds of Black Friday shoppers in the US planned to go in-store rather than online, versus 51% in 2020, and on Friday, Adobe Analytics estimated that consumers were on track to spend between $8.8bn and $9.2bn online, adding to the $5.1bn of ecommerce spending on Thursday’s Thanksgiving holiday. (Financial Times)

Expert Insights

Diane Wehrle, Marketing & Insights Director, Springboard [commenting on footfall across high-streets, shopping centres and retail parks]: “Firstly, the large proportion of office employees continuing to work from home meant that rather than visiting high street stores during the working day on Black Friday, for those shoppers who wanted to shop in store on Black Friday it was easier to head out to shopping centres and retail parks.

“Secondly, a reduction in overseas tourists in the UK has resulted in far fewer leisure shoppers who on Black Friday would typically head to central London, large city centres around the UK and towns attractive to tourists such as historic and coastal towns.

“The third factor was the adverse weather on Saturday, which acted as a severe deterrent to shoppers in making trips to towns and cities. However, despite these challenges, the more substantial retail offer in larger towns and cities appealed to high street shoppers more than smaller towns.” (Sky News)

Lucy Gibbs, Managing Consultant in Retail Insight, Capgemini: “Online sales were expectedly lower than last year’s lockdown boosted figures as consumers returned to the high street. However, search trends have also been lower this year for terms related to Black Friday and conversion rates did not pick up as strongly. As we dive deeper into the performance this month we should be able to understand if this was predominantly due to a return to the in-person experience, or whether other factors such as longer lower discounts and continued supply chain disruptions have played a part.” (Retail Times)

Rob Cameron, Chief Executive, Barclaycard: “All signs suggest that Cyber Monday is becoming increasingly important for both retailers and consumers. It’s perhaps not surprising given the growth and investment made in e-commerce during the pandemic. Following increased transaction volumes on Black Friday, I would like to congratulate businesses for the amazing job they have done overcoming the challenges and preparing for the biggest online sales event ever.” (Retail Week)