Black Friday 2020: Customers are shopping earlier and more digitally than ever before – what does it mean for small businesses?
It’s beginning to look a lot like Christmas – in fact, Barclaycard spend data has revealed that the festive season arrived a little early this year.
Despite a slight contraction in consumer spending overall (-0.1% year on year), figures from October show a clear trend for early seasonal shopping, with rapid growth in online transactions and continued support for SMEs – particularly local businesses. As Black Friday approaches, here we explore the story behind the shopping carts – and share our top tips for SMEs looking to make the most of this November’s sales spike.
A relatively recent import from the US (the first official Black Friday sale in the UK was in 2013), Black Friday is one of, if not the most important days in the calendar for many retailers. Last year’s Black Friday saw Barclaycard process a record-breaking 1,184 payments per second between 1-2pm. That doesn’t mean that it’s a straightforward payoff for retailers; in fact, in 2019 we reported that many businesses had expressed frustration with the pressure to deliver the deals needed to compete on Black Friday. In a very unusual year, these pressures come on top of the other challenges currently faced by the retail sector.
Why this year is different
While there is little doubt that coronavirus has had an impact on all our lives, in many ways the events of this year have shown us what our communities are made of. As part of our newfound “kindness economy”, up and down the country, people have worked hard to show their support for their friends and neighbours. This sentiment has spilled over into the way we spend, with new trends for conscious, small business, and local shopping spreading good cheer in the retail space where they are more than welcome – new measures and restrictions have taken a financial toll on many businesses this year.
Commenting on why this year might look a little different, Rob Cameron, CEO of Barclaycard Payments, said: “Over the past couple of years, we’ve seen an increase in the volume of transactions on Black Friday. 2020 is unique and with many stores across the UK currently unable to open, we expect a different picture this year. The silver lining is that businesses are seeing sustained year-on-year growth in e-commerce. Already this month Barclaycard has seen a 29% increase in the value of online transactions processed, and this is even higher in key 'gift' categories such as electronics, cosmetics and jewellery. This growth signals both a change in consumer behaviour, with people unable to buy gifts in-store, and the fact that many retailers are spreading out their discounts throughout November, meaning shoppers can take advantage of early bargains.”
SMEs more prepared for Lockdown 2.0
Our latest SME barometer SME Barometer has found that just under two-thirds (65%) of small and medium-sized enterprises say they feel more prepared for the current national lockdown than they did back in March. Top reasons given for this outlook are mental preparation (36%), the changes they’ve made to make their businesses more resilient (31%), and the government support in place (14%). But the real story this year seems to be digital acceleration. Across the UK, businesses are improving their websites (67%), investing in social media advertising (64%) and digital skills for staff (50%), putting more services online (66%), and generally increasing their online presence (45%), perfect for this year’s eager base of online customers…
Customer are spending earlier, consciously, locally and online
You may have noticed a few rogue sets of fairy lights starting to pop up in your neighbourhood. It seems many of us are really looking forward to the holidays this year, eager to get the tree up and start wrapping gifts as soon as possible. Boosted by early Christmas shoppers, general retailers and catalogues saw growth at 50per cent in October, according to Barclaycard October spend data. More time at home means more time to browse.
Online has really taken off this year. Barclaycard’s October research also showed that for supermarkets, online spending was up 94.4 per cent year-on-year in October – and we have to remember this was even before the latest restrictions came into play. Digital content and subscriptions also saw their biggest surge in growth since July (and incidentally, make great gifts). Importantly, the trend for conscious shopping looks set to continue, as 48 per cent of customers say they are looking to support local businesses.
A different kind of Black Friday
We understand that Black Friday isn’t for everyone – and we always encourage businesses to make the right decisions for them. There are likely to be customers out there who may be looking to reconnect with your business and who will be willing to spend money with you over the Black Friday period (some retailers feature offers all weekend, or even all week). If you do choose to engage this year, here are a few of our top tips for SMEs:
- Build anticipation. Advertise offers clearly and early online, on social media, and in store. You could also encourage happy customers to post about the purchases they have made.
- Choose offers wisely – and don’t feel that you have to offer the earth if you can’t afford it. Big, flashy offers are for big, flashy retailers – and even then, can have a big impact on a company’s bottom line.
- Bundle products together for an exclusive price e.g. 3 for 2, Choose 5 For £30
- Offering a free gift with the first e.g. 100 purchases can encourage traffic and is a great way to clear stock
- Make sure you are able to take safe payment whether online, in store, or over the phone, and remember contactless limits are now set at £45
- Offer flexible payment options for customers who may be working within a budget. Over in Germany, we recently partnered with Amazon to bring flexible, point of sale finance options to customers.
Whatever you do, the most important thing is to focus on adding genuine value for your customers – even if that simply means offering your thanks for supporting your business during this difficult time. This year’s customers are more mindful and grateful than ever before, and Christmas is the time to celebrate and nurture the relationships you have worked so hard to build with them.