Written by the team at PwC.
How, where and what are shoppers spending on Christmas and Black Friday this year?
With one in four consumers intending to spend more this festive season, we're expecting a total spend of £21 billion on presents and celebrations. Driven by a combination of people looking to get together for an extra special Christmas and a resurgence of interest in Black Friday, this year’s Golden Quarter looks positive for retailers. But there will be challenges, too. We look at what these findings mean for retailers and hospitality operators, and how they can maximise opportunities as we head into a critical time of year.
This year’s Golden Quarter is already set to be unusual, with retail and hospitality businesses needing to face up to some unique challenges.
In positive news, we’ve seen consumer sentiment remain resilient, buoyed by lockdown-forced savings pent-up spending demand, and increased confidence and optimism driven by the success of the vaccine rollout. But all of that is offset by a myriad of challenges: inflation on key items, out of stocks, staff shortages and supply chain concerns, alongside the high-street casualties, store closures we saw earlier in the year and yet-to-recover footfall.
And there remains a great unknown - the possibility of how future COVID-19 mitigation plans might affect the sector should virus rates increase or the NHS come under pressure. Whether that’s working from home guidance, the mooted vaccine passports or other restrictions, they may have an indirect effect on the success of the festive season.
Direct comparisons with last year are difficult. The lockdown in November 2020, coupled with last-minute tier restrictions in many parts of the UK just before Christmas had a significant impact on last year’s Golden Quarter, particularly on the high street. But even with little advance notice, which forced many consumers online, we saw better performance than expected for most retailers, though that did come at the expense of hospitality.
So, we’ve asked consumers about their spending intentions for Christmas - and Black Friday - this year. We look at what the outlook might mean for this year’s Golden Quarter, and how retail and hospitality can make the most of any opportunities that arise.
Christmas is a time when families reunite. In a typical year, three-quarters of us choose to spend some of the festive season with family: visiting family at home or abroad, or hosting extended family in our own homes.
How we spend Christmas, 2020-21 vs normal yearInteractive chartAt home with immediate familyOn holiday UK or abroadGo to family at their home in abroadGo to family at their home in UKAt home with extended familyLast yearThis yearNormal year0%25%50%75%100%Source: PwC Pre-Christmas Survey, October 2021
This year, two-thirds of us plan to get together over the Christmas period. While less than a normal year, it’s more than last year where we only saw half of people able to spend time with family. That means more gifting opportunities, more celebratory food and drink, and - in positive news for hospitality and fashion - more going out.
Planned spending on Christmas presents and festive celebrationsInteractive chartSpend more than last yearSpend less than last yearLondon East MidlandsYorkshire and HumbersideSouth WestWales South EastEast of EnglandWest MidlandsScotland North WestNorthern IrelandNorth East0%25%50%Source: PwC Pre-Christmas Survey, October 2021
Naturally, with more people at the Christmas dinner table, and many wanting to make it an extra special celebration this year, there will be more to buy. For over a quarter of us, that means spending more this year, with only 8% spending less. We also expect a slight increase in average spend (to £428 in 2021 vs £384 in 2020) across all age ranges and all regions, which leads to a total of £21 billion planned spending on presents and celebrations for Christmas 2021 (12% more than last year on average).
Lockdowns and tier restrictions throughout last year’s Golden Quarter led to an unsurprising but significant shift towards online shopping. While there is some intention to return to the high street this year, it’s not as marked as some retailers might hope. Online will be a big winner again this year.
Proportion of shopping spend by channelInteractive chartOnline for click and collectOnline for home deliveryAll onlineIn storeChristmas 2018Christmas 2019Christmas 2020Christmas 2021predictedBlack Friday 2021predicted0%25%50%75%100%Source: PwC Pre-Christmas Survey, October 2021
Millennials remain the most active online shopping age groups, with the youngest and oldest most likely to buy in-store. London also remains the most likely region to buy online, with popularity driven by click and collect as more workers return to offices.
Perhaps most concerning for physical stores, though, is the long-term trend for Christmas shopping getting much closer to that of Black Friday, which in the UK has predominantly been an online phenomenon in recent years. This may be exacerbated this year as famous high-street brands close physical stores and embrace digital presence. There’s a danger this becomes a self-fulfilling prophecy as more follow their lead to access that peak online trading.
Changes to Christmas celebrations last year led to some in what we bought. This year, our spending habits are a little more traditional. We’re planning to spend more on food and drink, Christmas dinner and stocking fillers, all of which were impacted to some extent in 2020. The categories we’ll spend less on are homewares and toys, both of which have previously seen plenty of success throughout lockdowns.
We’re leaving nothing to chance this year. While the first half of December remains the most popular time for shopping, more than half of us will have completed our Christmas lists before the end of November. With concerns over stock levels, delivery times and further impacts of COVID-19, 21% of us are looking to shop earlier than usual, particularly younger age groups and Millennials.
This intention to shop earlier could be driving interest in Black Friday. With a likely £9 billion spend, it’s a significant shopping event in the UK, even if its popularity interest had been waning in the last few years.
Interest in Black Friday and Cyber MondayInteractive chartNot interestedAvoid altogetherBought previously, but not this yearInterested and may buyInterested and definitely will buy2019202020210%25%50%75%100%Source: PwC Black Friday/Pre-Christmas Survey, October 2019, November 2020, October 2021
While we can’t compare to last year due to lockdown, it’s clear that there has been a resurgence in the number of people looking to participate in the event. One in four have said they are definitely buying this year, with the majority stating they are interested and may buy, and the biggest interest in London and among the young.
As ever, Black Friday spending intentions differ by gender, with men expecting to spend 60% more than women (£338 v £210). And across all age groups, we expect millennials to spend more than any others.
But interestingly, we’re not buying for Christmas, we’re buying for ourselves; especially men, where 74% will buy for themselves. The majority of us will buy less than a quarter of our Christmas presents during Black Friday, with a mere 3% using the event to buy all their gifts.
Top categories of Black Friday spend, 2020 vs 2021Interactive chart20202021Electricals and technologyAdult fashionChristmas stocking fillers and treatsHealth and beautyHomewares Toys Children's clothingFood and drinkHolidays and days out0%10%20%30%40%50%60%Source: PwC Pre-Christmas Survey, October 2021
And this is reflected in the categories.
There’s a strong interest in electricals and fashion. Electricals are often driven by new releases but this year’s Black Friday falls in the middle of the busy season for tech announcements from industry giants, which is perhaps driving interest.
Interest in fashion is good news for a category hit hard by lockdowns. And this interest may be in advance of anticipated - and impending - Christmas celebratory events.
“Christmas this year may not be completely back to normal but consumers are determined to make it a good one and many are prepared to spend up to 20% more than last year. Retailers should also take advantage of renewed interest in Black Friday this year but will need to avoid discounting too much too early and impacting the success of further Christmas trading.”
Lisa Hooker, Leader of Industry for Consumer Markets, PwC UK
It may not be back to a completely ‘normal’ Christmas this year, but consumers are determined to make it a good one. And they are ready to spend.
With many already prepared to spend 20% more than last year, and buy more presents, there’s a unique opportunity for retailers this Golden Quarter.
We already know consumers are looking to spend significantly online - for both Christmas and Black Friday - so retailers need to think about how they can get the best from that scenario. For those with a strong online presence, that may mean refining what they offer or where possible ensuring sufficient levels of stock to meet demands. For those with a greater high-street offering, they must think about how to entice people into physical locations. For multichannel retailers, that may mean correctly balancing discounting online while remaining full-price in-store, to attract Black Friday bargain hunters online while protecting margin.
For many, they need to be careful to maintain margin this Black Friday. Discounting too much to drive volume will only impact the success of any Christmas trading, which is likely to begin in earnest shortly after. With possible supply constraints around the festive season, managing pricing to protect margins and not disappoint shoppers, particularly where people will be more willing to pay full price, will be critical.
But knowing that shoppers will look to buy early gives businesses a real chance to thrive. Early shopping offers retailers the opportunity to reduce delivery costs and pressures, manage demand to reduce the cost of seasonal workers, control pricing to protect margins, and offer certainty of delivery to consumers to build trust. Alongside the willingness of consumers to spend more this year, those that get this balance right are likely to see sustained success this Golden Quarter.
