US to boost spend, Europe hold back amid cost-of-living crisis

Many shoppers say they plan to spend less this Black Friday as the cost-of-living crisis bites.

Richard Baker | In Pictures | Getty Images

Black Friday may offer an opportunity to bag a bargain ahead of the festive period, but many shoppers will be expecting retailers to cut prices by a greater margin this year as they tighten their belts amid a worsening cost-of-living crisis.

Shoppers in Europe plan to spend almost one-fifth less during this year’s annual discount period as inflationary pressures weigh on consumer sentiment, according to research from Boston Consulting Group this month.

U.K. consumers are set to cut back by the greatest margin in the region, spending 18% less, while those in France and Germany both plan to reduce their spend by 15% and Spain by 13%.

U.S. consumers were alone in the survey of nine nations, which also included Australia, in saying they expect to spend more this year, upping their expenditure by 6%.

Retailers under pressure

The findings come as the global economic outlook darkens, particularly in Europe, where Russia’s invasion of Ukraine has weighed on growth and sent energy prices rocketing.

The U.K. is already in a recession, the country’s independent Office for Budget Responsibility confirmed last week.

That is piling the pressure on retailers, already struggling to recover from a Covid-19 slowdown and attract increasingly cost-conscious consumers. Meantime, many companies, seeking to correct shortcomings and supply issues from last year, have built up vast inventories of stock that they are now under pressure to shift.

What we have seen is the Black Friday trend spread.

Kristy Morris

managing director of commercial solutions, Barclays Payments

“Black Friday is a vital moment in the shopping calendar for physical and online retailers still recovering from the Covid pandemic and now facing consumers in many markets who are reducing their spending plans for many non-essential items,” Jessica Distler, BCG managing director and partner, said in the report.

That could see retailers extend their discounts across the month, increasing buying opportunities for consumers who have the money to spend.

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