Cost-of-living squeeze set to hinder volumes in the lead up to Christmas

Black Friday spending drives sales but cost-of-living squeeze set to hinder volumes in the lead up to Christmas

Both Black Friday and Cyber Monday have become increasingly important dates for many retailers because the sales of discounted goods achieved on those two days can plug financial holes in their business to put them in the black for the year.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “These days of discounts helped to boost the sales of home furnishings which have suffered in recent times amid the cost-of-living crisis, with extra spending on everyday essentials like food and household energy eroding disposable income, forcing many to put off making big ‘nice-to-have’ purchases.

“But for many retailers, bumper takings during these annual shopping events won’t be enough to put them back on an even keel, financially, this year after being hit by a huge drop in discretionary spending amid the biggest fall in living standard in generations. The cost-of-living squeeze on budgets is also set to hinder sales volumes this month in the lead up to Christmas. The challenge for retailers is to select the right strategy for their business to retain cost conscious shoppers. Companies are grappling with their own soaring costs fuelled by a range of factors including high labour costs, soaring energy bills and post-Covid supply bottlenecks. They have to decide how much of this to absorb and how much to pass on to shoppers.

“With inflation hitting a new 40-year high last month and the spectre of higher interest rates to tighten the screws on skyrocketing prices, shoppers will likely continue to reshuffle their spending priorities and allocate more of their budget on everyday essentials.”