Grant Thornton’s retail industry group reports predictions of strong consumer spending and a return to stores have come true after the Black Friday weekend, although not to the extent retailers were expecting.
Black Friday sales data shows Australian consumers have spent $4.97b in global sales, well below the forecast $6.2b, representing a 17 per cent increase on last year. Grant Thornton’s retail team noted this change in how consumers are spending shows people are seeking value for money as household discretionary spending becomes tighter.
“We saw shoppers bring forward their Christmas spending to November, leveraging promotional activities. Consumers are making increasingly considered purchase decisions for bargains to save in the long run,” said Tyson Dujela, Retail Industry Group partner.
According to the data, the average cart price increased over Black Friday weekend, rising from $163.28 per transaction in 2021 to $167.99 this year.
This year Grant Thornton noted buying behaviour shifting, with consumers returning to stores, making the most of their shopping experience after lengthy pandemic and lockdown-induced waiting periods, with the data showing a 29 per cent increase to in-store point of sale – or offline, bricks-and-mortar sales – compared to 2021.
“This shows consumers still want store experiences as they create an engaging, touch and feel, customer service driven retail experience with the instant gratification of buying products in person,” said Tyson Dujela. “The trend our retail industry group saw of consumers returning to stores isn’t to say that the online experience isn’t just as important. In this era of omnichannel retailing, retailers need to provide a consistent experience across all touchpoints – spanning from online channels to stores.”
Similarly, Salesforce’s Connected Shoppers Report shows poor customer experiences can be detrimental to businesses, with 80 per cent of shoppers abandoning a retailer after three bad experiences.
Reflecting on 2022 more broadly, this year was not immune to disruption. Retail, like most sectors, was impacted by price inflation, a tight labour market, cost pressures and a reduction in promotional activity.
Grant Thornton’s Retail Industry Group predicts this sentiment may not continue into 2023, as consumers who held record level household balance sheets a year ago are now more cautious with their spending as inflation, rising interest rates and impacts on the cost of living are front of mind, inevitably affecting retailers across all sub-sectors.
“We predict shoppers of high-end retailers may start going to more affordable stores if businesses don’t put measures in place to retain customers. Consumers are projected to reduce discretionary spending, prioritise essential goods and discount options,” continued Tyson Dujela. “To combat impacts of changing spending habits, we encourage retailers to plan inventory carefully and consider how demand will impact your products.”
In addition, shoppers have in recent years become increasingly conscious of making sustainable purchase decisions, considering values and businesses impacts on the planet and communities. However, expected changes to discretionary spending may influence increasingly price-sensitive consumers to prioritise price over responsible purchases, therefore affecting outlet and product choices.