City snapshot: Golden quarter set to shine for retailers

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Retailers can look forward to the strongest golden quarter since before the pandemic despite gloomy consumer confidence levels, according to a panel of industry experts.

The quarterly assessment by the Retail Think Tank suggested a combination of factors would combine to ensure Christmas and the discounting and promotional period around Black Friday would see the overall health of the retail sector improve on Q3 and on the golden quarter period of 2023.

Despite worries surrounding the upcoming autumn budget, consumers have higher real incomes, a healthy savings base to draw on, lower interest rates, lower inflationary pressure and services than at the end of 2023 and the intention to shop for promotional and discounted goods, the think tank said.

Pent-up demand from shoppers holding off from making big purchases ahead of Black Friday and Cyber Monday, should boost takings at retailers during the final quarter, it added.

Retail analyst Nick Bubb, who is part of the Retail Think Tank, said Q4 sales would likely benefit from “a replacement cycle that is underway on all the technology that was bought by consumers for working at home during the pandemic”.

And Mike Watkins, head of retailer & business insight for NIQ UK, added that food promotions had gradually crept up during the year as retailers battled to drive volume sales following changes to consumer behaviour during the cost-of-living crisis. “But with demand levels now more established, we are unlikely to see further increase in promotional activity, as shopper spend at most food retailers is looking strong as we start Q4,” he said.

Members believed the level of discounting of goods across the retail sector was likely to not be as deep this Q4. Linda Ellett, UK head of consumer, retail and leisure at KPMG, said: “Black Friday and the seasonal discounting period over the coming weeks will likely be a far more controlled strategy for many retailers due to improved stock and logistics control. On average, discounting isn’t likely to be as deep this year, but retailers will be carefully working out what promotions will be most effective in order to get more people into store. The more people in store or viewing the website, the greater the chance of other spend.”

The Retail Think Tank, which is administered by KPMG UK, met on Wednesday 9 October 2024.