Retailers pin hopes on bumper golden quarter with Black Friday, Cyber Monday and Christmas
The final three months of the year, also known as the golden quarter, are make-or-break for retailers. Retail spending has consistently languished this year, or been propped up by margin-carving discounts, but pent-up demand is expected to give the sector a much-needed boost during the holidays, according to a panel of industry experts. Despite consumer [...]
The final three months of the year, also known as the golden quarter, are make-or-break for retailers.
Retail spending has consistently languished this year, or been propped up by margin-carving discounts, but pent-up demand is expected to give the sector a much-needed boost during the holidays, according to a panel of industry experts.
Despite consumer confidence remaining volatile, there is consensus across retail experts that this golden quarter – which includes Black Friday, Cyber Monday and Christmas – is likely to be the strongest for retail health since the pandemic.
Retail consultant Miya Knights said that an “increase in spending power for many people”, plus “pent-up demand from consumers holding off larger purchases until the promotional period” should boost the sector.
The survey of industry experts also cited cooler inflation, higher wages and a healthy savings base to draw on as reliable indicators of a healthy holiday season.
Nick Bubb, from Bubb Retail Consultancy, added that fourth-quarter sales will likely benefit from “a replacement cycle that is underway on all the technology that was bought by consumers for working at home during the pandemic.
“Retailers will look to capitalise on that ahead of Christmas, helped by the stimulus from lower interest rates and new AI-linked product launches.”
Jonathan De Mello, founder and chief executive of JDM Retail, highlighted that despite the challenging economic context for many households, “demand for Taylor Swift and Oasis tickets, [plus] electronics purchases related to the sporting action at the start of the summer, are examples that when the desire… is there, there’s still plenty of consumers willing and able to spend.”
A fly in the ointment?
While a further cut to the base interest rate in November and December would boost consumer confidence, tax rises in the Autumn budget could dent it.
Confidence sank in September ahead of the budget, with Labour’s grim narrative about the black hole in public finances, plus a media frenzy around what plugging that gap might look like, affecting attitudes across the country.
“The conditions are there for a decent end to the year for the retail sector,” Linda Ellett, UK Head of Consumer, retail and leisure at KMPG, said.
“But consumer confidence remains fragile and until interest rates fall further it’s important that the Budget doesn’t scare consumers into sitting on savings for longer”, Ellett added.
This is particularly important for retailers, as working families are their biggest group of consistent spenders.
“Caution still remains the watchword, as this recovery is as fragile as it is promising,” John Choong, head of equities and markets at Investors Edge, said. “A misstep on 30 October could easily derail the sector’s recovery.”
Why is the golden quarter so important for retailers?
The golden quarter is, traditionally, retailers’ busiest and most profitable time of year – shops can make a majority of their yearly revenue during it.
It contains Black Friday, Cyber Monday, and Christmas – in 2023, UK consumers spent an estimated £13.3bn over the Black Friday alone.
The last two years have been tough – particularly for small businesses – with the cost-of-living crisis, strike action and international uncertainty all hurting trade on both sides of the equation.
Last year, BDO’s high street sales tracker recorded its worst December performance sicne records began.
That makes this year’s quarter even more important, as retailers struggle to stay afloat amid a spate of closures in the industry over the last few years.
Describing the coming months as “crucial” for the sector, British Retail Consortium chief Helen Dickinson said that retailers are “holding their breath” ahead of the spending figures and the budget.