Consumers hold out for Black Friday deals hampering retail sales in November

The latest ONS retail sales figures show volumes rose by 0.2% in November, driven by household goods (up 1.1%) and food (up 0.5%), however clothing dropped significantly (down 2.6%).

Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, comments: “The later than usual Black Friday weekend meant November’s retail sales figures saw only a slight uptick as cost-conscious consumers held off to bag a bargain. Despite many retailers launching Black Friday offers early, November trade got off to a slow start which dragged on for most of the month. This was driven by clothing which fell to its lowest level since January 2022. The only saving grace was half-term and Halloween spending helped to slightly offset disappointing sales throughout November.

“Black Friday is a crucial event for the sector; its performance determines how heavily retailers will have to discount in December and for many, it can be the saviour for the month. December will be the last chance for retailers to get as much stock as possible out the door before the next quarter – a typically slower period where consumers opt to stay in and save, rather than splurge.

“As consumer confidence continues to build and shoppers return to the high street, this should translate into more retail spending next year. However, there are big challenges coming down the track for the sector, so retailers will be banking on a consumer-led recovery to come to fruition so they can combat a surge in costs.”

Thomas Pugh, economist at RSM UK, added: “The tick up in retail sales volumes in November suggests that the stagnation which has gripped the UK economy since the summer continued into the final months of the year.

“While the recent strong pay growth numbers may make the Bank of England uncomfortable, it means that real incomes are growing at just under 3%, which suggests consumer spending should gradually rise next year. However, consumers remain extremely cautious. The very sharp drop in clothing sales in particular could suggest that consumers are cutting back on non-essential purchases.

“We still expect a rise in consumer spending next year, due to strong wage growth and a gradual decline in the saving rate, to help drive an acceleration in GDP growth. But the risks are clearly building that cautious consumers choose to save rather than spend increases in income, raising the risk of weaker growth continuing through the first half of next year.”