It’s not you, it’s me: The end of the UK’s love affair with Black Friday?

With Christmas on the horizon and the cost-of-living crisis still hitting UK consumers’ pockets, shoppers are looking for deals to make each pound stretch further. But what role does Black Friday play for UK consumers – does it represent a welcome opportunity to make big savings, or are shoppers falling out of love with the November milestone?

To find out, Lloyds Bank Market Intelligence analysed anonymous consumer spending across debit and credit card transactions made by 26 million retail consumers. The resulting data offers retailers large-scale, granular insights into the spending habits of consumers – here’s what we found.

A surge towards electricals

Despite the fact that retailers start seasonal sales in November to attract consumers in the run-up to Christmas, Black Friday still has some demonstrable effect on spending. In 2021, retailers saw, on average, a 35% uplift in sales volume and a 60% increase in value compared to the daily average of the 5-week period before and after the event. The following year saw similar figures, albeit slightly reduced. Black Friday in 2022 sparked a 32% increase in sales volume and a 51% increase in value.

This increase is driven primarily by the amount spent, rather than the quantity of goods: large ticket items – particularly electricals – dominate purchases on those specific days. In fact, electrical goods retailers saw sales increase by 45% during the week of the Black Friday sales, with the average transaction spend reaching ￡70, compared to just ￡55 during the weeks preceding and following the event – representing a 28% increase.

Interestingly, the pursuit of electrical goods on Black Friday is fairly unique in the retail landscape, and other sectors witnessed a more modest rise during the week of the sales. Clothing retailers saw an increase on sales of 9%, whereas health and beauty retailers and department stores both saw an increase of 13%. Some sectors remained immune to any positive impact of Black Friday: for example gardening and hobby stores saw no effect on their sales within the last two years, highlighting that consumers are spending in a targeted fashion, rather than universally, during the Black Friday sales.

The demography of bargain hunters

While it’s true that the Black Friday effect varies by sector and product, it’s also true that it varies by consumer demographic too with younger generations spending more. Retailers tend to fare better if they can attract Generation Z customers, aged between 11 and 26, having seen a 12% increase in revenue from this consumer segment. This is in comparison to revenue derived from the Millennial segment, aged between 27 and 42 (10% increase), and the Generation X segment, aged between 43 and 58 (5% increase).

Retailers with an online offering will tend to fare better, with 60% of Black Friday purchases carried out online. On the day itself, online retailers saw their sales increase by 72% compared to an average day.

Changing routines, changing spend

The UK’s relationship with Black Friday has also changed over recent years due to the shift to hybrid working and increased digital activity, which has in turn affected spending patterns throughout the day. ?While overall peak activity generally takes place from 10am to midday on both Black Friday and Cyber Monday, online sales exhibit a double-hump; first peaking in the morning between 9am and 11am, and again later in the day between 8pm and 9pm.

What’s more, it’s also clear that early bargain hunters may be rewarded for their efforts. Retailers should ensure that they are ready for sales ahead of Black Friday, since clothing retailers have seen sales increase by 33.1% on the Thursday prior to Black Friday, department stores by 22.7%, electricals by 27.9%, health and beauty by 12.1%, and sport by 17.8%, all when compared to a normal Thursday in the two weeks before and after Black Friday.

The Black Friday illusion?

Despite what seem to be increases in consumer spending triggered by Black Friday sales, it could be the case that the attractive deals offered by Black Friday in fact focus the same amount of spending on one event, rather than it being distributed over a certain period of time. As a result, UK retailers may see little overall growth.

Over the past two years, sales growth has been stagnant in the five-week period around Black Friday and Cyber Monday, with only a 0.5% increase in sales per customer in 2022, compared to the same period in 2021. Discretionary spend per customer in 2022 was relatively flat compared to 2021, affecting businesses such as clothing retailers (2.5%), department stores (1.7%), electronic retailers (-1.12%) and health and beauty retailers (-0.46%).

There’s no doubt that Black Friday encourages spending, but the extent to which retailers can rely on it for growth remains under question as cost-of-living pressures continue to bite and inflation remains a concern.

“British retailers have been adapting their seasonal sales strategies to take advantage of Black Friday since we first imported the concept from the US some years ago,” said Aled Patchett , Head of Retail and Consumer Goods at Lloyds Bank.

“Black Friday isn’t just one day anymore. Sales now start in early November and last well into December. However, our analysis shows that the week in which Black Friday falls is now more important than ever for retailers.”

There may still be love for the November sales in consumers’ hearts, but UK businesses will need to carefully assess whether Black Friday alone can breathe the much-needed air into the high street.

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Methodology:

Lloyds Bank Market Intelligence is a data solution that provides actionable insights from transactional and demographic data in one single source.

Data is aggregated from 26 million Lloyds Banking Group customers across credit and debit card products.

Comparative analysis performed over 5-week period with Black Friday week falling in the middle - Black Friday week is a control event with normal spend reviewed in the two weeks prior and after the event week.

Lloyds Banking Group is a financial services group that incorporates a number of brands including Lloyds Bank. More information on Lloyds Banking Group can be found at lloydsbankinggroup.com

Definitions:

Sales value: the sum of all sales in ￡ by category

Spend per customer: the total sales value/number of customers

Sales volume: the total count of transactions per category