– Retailers across Europe often experience large numbers of customers in the Black Friday shopping frenzy, but as rising prices this year have eroded real wages and reduced living standards, consumers tend to be more cautious with regarding your expenses.
Lily, a customer in the United Kingdom (UK), said that she had to reduce her purchasing plan due to the high rate of inflation. People are “holding on to their money a little more” and are “a little more cautious about what they buy these days, especially since Christmas is right around the corner,” she said.
Inflation in the UK rose 11.1 percent in October, hitting a new 41-year high. After taking inflation into account, the average regular wage fell 2.7 percent between July and September, the biggest drop in growth since comparable records began in 2001, according to the Office for National Statistics (ONS).
Amid the worsening cost of living crisis, UK consumer confidence in November still hovered near record lows after bottoming out in September, surveys by market research firm GfK showed.
“Retailers are desperate to be encouraged to spend, but the worry is that it could turn into a gloomier Friday,” said analyst Susannah Streeter at financial services firm Hargreaves Lansdown.
Although some researchers still expect UK spending to rise by around 0.8 percent over the weekend, including Black Friday and Cyber Monday, this figure masks the impact of inflation on volumes, Streeter said. “Increasing prices mean we can put fewer items in virtual carts and baskets.”
As of Friday midday, the number of shoppers at UK retailers was more than 22 per cent below levels prior to the 2019 COVID-19 pandemic, according to data provider Springboard.
“I would say that, right now, the challenge facing retailers is probably even more difficult than the one they faced during a pandemic” because consumer confidence and the cost of living crisis are so dominant in people’s minds, Andrew Goodacre, chief executive of the British Independent Retailers Association (Bira), told .
“We have seen retail sales fall in October and September and that will put pressure on Black Friday to be as successful as it has been in previous years. Weak consumer demand is a real threat to high streets across the country.” added Goodacre. .
Throughout Europe, the prospects are not rosy either. Inflation is high. The energy crisis may last beyond winter. The recession is on the horizon. All of this is weighing down consumers, dealing a heavy blow to household budgets and casting a shadow over shopping events.
“We already started promotions at the end of October and beginning of November, because we see that we need a longer period of sales,” said Miha Drganec, sales manager at Big Bang Electronic Store in Ljubljana.
The outlook for the eurozone’s traditional winter sales is subdued this year and any momentum will not be enough to prevent consumer spending from contracting in the fourth quarter, said Tomas Dvorak, a senior economist at economic advisory firm Oxford Economics. .
Pessimism is also expected to hang over Europe over Christmas. “Consumers are unlikely to splurge during holiday sales and much more likely to become thrifty. Similarly, retailers’ assessment of current and expected business conditions heading into the festive season have been grim.” Dvorak.
No quick improvement in sight. Inflation is expected to ease in 2023 but will likely remain high at 7 percent in the European Union and 6.1 percent in the eurozone, statistics show.
“I think it’s also important to keep your life going, but still maybe save on something that’s not a necessity, that you don’t really need right now. And then hopefully inflation will stop rising, and we can all go back to be a little more normal.” life,” Steffen Nielsen, a client in Copenhagen, told .
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