The 4 forecasting challenges facing retailers this Black Friday

As we approach another Black Friday, retailers face a new set of challenges around this critical trading period. And like recent Black Fridays, this means forecasting customer behaviour remains as unpredictable as ever.

Why it matters

This period is central to retailers’ annual plans. Last year the UK registered its best ever Black Friday, with shoppers spending £9.2 billion. But it also acts as a bellwether for consumer confidence, making Black Friday’s performance an indicator of the state of the economy.

Deeper dive – 4 challenges making Black Friday forecasting difficult

1. The cost-of-living crisis: Spiralling inflation and unprecedented energy cost rises have seen UK household incomes on their longest downward trend on record. And with the Bank of England predicting the UK economy will enter recession, this is sapping the ability and willingness of consumers to spend.

1. Retailers are thinking the unthinkable: This year we’ve seen long-term ecommerce resistors launch online services and brands refunding returns while letting customers keep the products. Rocketing logistics costs and inventory gluts are forcing retailers to take unprecedented steps to protect their margins, which could have implications for Black Friday.

1. Inventory levels remain volatile: Sky-high demand following the pandemic has led to retailers amassing too much of the wrong stock and in the wrong locations. As consumer demand normalises, this may impact how retailers approach Black Friday and consumers’ appetite for what they are offering.

1. A winter World Cup: For the first time ever, the World Cup takes place in November, with England playing on Black Friday itself. Traditionally held in the summer, the tournament often has a positive effect on retail sales, but the timing of this year’s event introduces a big unknown for retailers.

The bottom line

Once again, retailers are having to forecast Black Friday at a time of uncertainty and a rapidly changing environment. While this is a scenario they have become used to, this year, falling confidence is seeing consumers trade down and adopt new shopping behaviours making Black Friday even more challenging.

To learn more about these challenges and the strategies retailers can adopt to help deliver a successful Black Friday, download your copy of our Black Friday report here.