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 from Shopify shows Australian consumers have spent $4.97 billion in global sales, well below the forecast $6.2 billion, representing a 17% increase on last year. 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,” Grant Thornton retail industry group partner, Tyson Dujela said.
According to the Shopify 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 shifting buying behaviour with consumers returning to stores, making the most of their shopping experience with the Shopify data showing a 29% increase to in-store point of sale 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,” Dujela said.
“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.”
Reflecting on 2022 more broadly, this year was not immune to disruption with 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.
“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,” Dujela added.
“To combat impacts of changing spending habits, we encourage retailers to plan inventory carefully and consider how demand will impact 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.