Retail

"If the price is right"

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New Cardlytics State of Spend study reveals tentative recovery in consumer confidence

After two years of post-pandemic recalibration, UK consumers are shopping again – just not like they used to. 

The latest data from Cardlytics reveals a retail landscape defined less by indiscriminate demand and more by considered choice. 

While spending remains resilient in many categories, shoppers are now clearly applying more scrutiny to how and where they spend. Value, convenience, and perceived quality are under the microscope, and if expectations aren’t met, consumers are pulling back.

This divergence is playing out differently across the retail sector. Categories like high-street fashion and beauty are holding strong, buoyed by brand loyalty, reviving high streets, and the occasional feel-good purchase. 

But grocery and household tell a more precarious story, where price sensitivity and shifting shopping habits are forcing brands to work harder and smarter to keep customers loyal. 

Whether shopping in-store, online, or through delivery apps, today’s consumer expects more than just competitive pricing. 

They’re looking for value that feels personal. For retailers, the challenge is clear: speak directly to customer priorities, or risk being left behind.

Retail: A resilient core – but rewards go to relevance

Fashion and beauty continue to defy broader economic headwinds. Spending on make-up and beauty products surged by 19% year-on-year in Q1 2024, and growth has carried into 2025, albeit at a more modest 5%. The number of transactions in the sector has outpaced spend, suggesting that while shoppers remain engaged, they are consciously managing budgets – opting for smaller, more frequent purchases that still offer a sense of indulgence. It’s a pattern that reflects the so-called “lipstick effect”: the tendency for consumers to turn to affordable luxuries during uncertain times.

High street fashion is also faring well. After growing 9% in 2024, the category recorded a further 5% uptick in early 2025, driven by established brands with a strong physical presence and a loyal customer base. This comes despite recent cyber attacks on major retailers, which - in good news for the sector - hasn’t deterred shoppers as of yet. Rather than stop spending, it just shifted it - as shoppers showed they are loyal to their habits over individual brands. 

Online fast fashion, meanwhile, showed little momentum through 2024, but increased sharply in Q1 2025 with a 13% rise in spend. Discount-led promotions and trend-led buying may be drawing cautious consumers back to basket - but this trend remains nascent stages.

However, not all categories are experiencing this trend. Department stores saw a 4% drop in spend in 2024, with a further 5% decline in 2025. Transactions have followed the same downward trajectory, pointing to a broader shift away from traditional department store formats. As shoppers prioritise experience, value and, crucially, brand alignment, department stores may be losing relevance to more focused propositions.

Cardlytics Analysis

Retailers that combine physical presence with a strong sense of brand identity continue to perform strongly. But brands can no longer rely on habitual customer loyalty. Our data shows clear momentum for brands that are giving customers a feel-good factor to shopping, whether that be through price, experience or personalisation. 

Case Studies

• A leading e-commerce & retail brand partnered with CDLX to drive new customers and ensure incremental revenue, by leveraging CDLX’s pay-per-performance channel to incentivise spend from competitors via cash back reward. The campaign delivered £1m revenue across 20K redemptions, captured 27% SoW across redeemers from competitors. Across the “New” segment, CDLX captured 77% SoW from competitors. 
• A major European health & wellness brand partnered with CDLX to acquire new customers, re-engage and retain lapsed and existing customers, and drive sales over a six week period in Q1 2025. Leveraging our proprietary transaction data into data-driven marketing, the campaigns drove over £2M Revenue and an average ROAS of £24.41. During that period, the brand increased share of wallet by 52%, crucially gaining ground on key competitors in the health and wellness industry.

Grocery: Essential, but under pressure 

Supermarkets remain a staple of consumer spending, but the data tells a story of growing caution. After recording 9% growth in 2024, so-called ‘big grocers’ saw a 3% fall in spend in the first quarter of 2025. The number of transactions have held steady however, suggesting that shoppers are still showing up – they’re just spending less when they do.

This theme appeared prominently across convenience grocery. 

Spend rose by 11% in 2024, before dipping 4% this year. Unlike the supermarkets, however, transaction volumes declined modestly, pointing to a broader behavioural shift. Shoppers appear to be planning more carefully, opting for fewer top-up trips and returning to larger, weekly shops.

In contrast, grocery delivery continued to grow, extending its gains from last year. After a 16% rise in 2024, the category saw a further 13% increase in early 2025, with both the average transaction value and number of orders increasing. Once considered a pandemic-era habit, online grocery ordering now looks like a lasting behavioural shift – particularly for customers who value predictability, convenience and the ability to budget in advance.

Cardlytics Analysis

The return of the big weekly shop, combined with the decline in spontaneous convenience visits, signals a shift towards planned, value-driven behaviour. For grocers, this is both a challenge and an opportunity. 

The ability to personalise offers, reinforce loyalty, and remove friction at checkout is becoming critical, particularly as shoppers become more deliberate in how and where they spend. Cashback rewards can help bridge the gap between price expectations and perceived value, especially when tailored to individual behaviours. Delivery providers are responding well to this shift, offering consistent, low-surprise experiences that support budgeting and convenience. A similar customer-first approach is increasingly expected in-store, where value and planning now take precedence over impulse.

Case Study

A leading food delivery platform and CDLX partnered to drive new customer acquisition and incremental revenue, using cashback rewards to incentivise spend from competitors.

The campaigns delivered 119K redemptions and £2.9M in revenue, capturing 44% share of wallet across lapsed and acquisition segments. Incremental revenue from the "New" customer segment alone reached £470K, with repeat customers generating an additional £7.2M in spend post-campaign.

Household: Still spending, but pulling back

After a period of steady post-pandemic investment in the home, household spending is beginning to cool. While consumers are still investing in their living spaces, they are doing so with increasing caution – prioritising essential upgrades over discretionary improvements. Across all categories, the number of transactions has remained broadly stable, but average spend is softening – indicating a shift towards smaller, more deliberate purchases.

This was the case for DIY, which saw spend increase modestly by 4% in 2024, before falling 1% in early 2025. Transaction volumes held steady, but average spend edged down – showing that consumers are now focusing on smaller-scale fixes or improvements, rather than large projects.

Value homeware followed a similar pattern, emphasising the importance of affordability in the household goods sector. While total spend softened, the number of transactions held firm, showing a consumer preference for incremental upgrades that deliver a sense of progress without straining budgets. Elsewhere, spending on garden and outdoor products declined in early 2025, reflecting a clear pivot towards core priorities, with seasonal or aspirational purchases falling by the wayside.

Spend for electricals declined by 6% in 2025, alongside a 7% fall in transactions. But average spend rose 6%, suggesting a more selective, quality-focused approach to purchasing habits. Consumers appear to be waiting longer between purchases, but when they do buy, they are choosing higher-spec replacements – reinforcing the idea that perceived value, rather than just price, is driving decision-making.

Cardlytics Analysis

In the household sector, the rules of engagement have changed. Big-ticket spending is cooling, but our data shows that consumers are still willing to invest when they feel the value is tangible, especially on higher-spec replacements in categories like electricals. 

Cashback rewards are proving particularly effective in this space, encouraging considered purchases while reinforcing the idea of getting more for less. Retailers focused on affordability are outperforming their lifestyle-led counterparts. 

The signal from consumers is clear: value and functionality matter more than non-essential or lifestyle-led propositions. Brands that demonstrate they understand their customers’ priorities - and reinforce that through personalised offers and targeted cashback - will go further in earning loyalty and driving conversion.

Case Study

A leading DIY brand and CDLX partnered to improve incremental sales, drive new customers and repeat visits as well as deepen loyalty with existing customers. Using CDLX’s proprietary purchase intelligence data, the campaigns identified and targeted customers with personalised value-driven offers. 

Over the six-week period, over £800k in incremental sales were driven. The brand has seen 39% of campaign customers return to shop again, and captured 60% share of wallet from key competitors during that time.

Navigating a more cautious consumer landscape

Our analysis for the first four months of 2025 painted a clear picture of an increasingly value-conscious consumer. While there were bright spots — such as sustained demand for affordable luxuries and resilient online grocery growth — the broader retail environment showed signs of growing caution. The data indicated that a softening in consumer confidence could be on the horizon — something that recent retail sales figures from May have now confirmed, with sharp drops in sales linked to rising inflation and consumer cutbacks.

The opportunity for brands lies in how they respond. Our data shows that personalisation, value-driven propositions, and transparent rewards are more important than ever. Shoppers are still spending, but they are making deliberate choices about where they see true value. Cashback rewards and tailored offers can play a crucial role in reinforcing loyalty and driving conversion during this period of increased scrutiny.

For retailers, the message is clear: relevance, value, and trust must be at the heart of every interaction. Businesses that consistently prove they can deliver meaningful value at the right price will be best positioned to secure customer loyalty and drive sustainable growth in the uncertain months ahead.

Apparel: Stop Taking Customer Loyalty for Granted

Introduction

In our previous report, Redefining Customer Loyalty, Cardlytics defined loyalty as a consumer’s preference for a merchant over its competitors. We analyzed $160B in spending across six industries to measure customer loyalty and spending patterns with both loyal and non-loyal customers.

But customer behavior isn’t fixed—customers shift between loyalty segments over time. Understanding these shifts helps identify churn and informs strategies to nurture relationships and move customers to higher loyalty segments. In our Loyalty Movement Report, we dive into customer behavior in the Apparel category to better understand engagement over time by analyzing more than $17B in consumer spend behavior.*

Apparel Category Loyal Customers

On average, 61% of a merchant’s customers are not actually loyal. But the loyal segment has a much higher share of wallet (85%) than a not loyal segment (21%).

Top Customers (top 10% of most frequent transactors) show a +6 point uptick as loyal vs not loyal customers. But the loyal customer segment shows more than 3x higher share of wallet.

Findings

We looked into purchase data at all Apparel brands in the US over the last 8 quarters (Q1-23 through Q4-24) on a quarter by quarter basis to see whether even the “most loyal” customers showed changes in their purchase behavior.

Apparel Loyalty Movement

Overall, quarter over quarter, 41% of customers tend to remain in their existing segments while 16% increase or decrease their loyalty to a merchant. Yet there is much more extensive customer loyalty movement within the “not loyal” segments. 

Segment Movement

While all segments show purchase behavior movement, the Tied segment (part of Not Loyal customers) shows the most movement - both up (29%)  and down (29%) - into other segments. 

Apparel Leaky Bucket

Apparel brands are acquiring new customers yet even more existing customers are moving into the lapsed tier. This cycle can be reversed by continuing to nurture existing customers.

Diving deeper into the individual segments tells us:

• ‍Loyal customers and those that Prefer the competition are the most rigid (with 57% and 58% staying the same, respectively). Those customers that are Tied have the greatest propensity for a behavior change (with only 18% staying the same).
• While the most Loyal customers show a 25% lapsed rate at similar levels as Tied, this is most likely not connected to churn vs connected to cadence of shopping behavior (maybe they don’t buy clothes every that frequently).

Definitions of Customer Segments

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Loyal Customers
Loyal: Only shop with a specific brand, or have the highest share of wallet with a given brand and relative rank is lower than all other brands in consideration set

Not Loyal Customers
Tied: Similar relative ranks to 2 or more brands regardless of share of wallet ranking
‍Prefer: Lower share of wallet and higher rank than other brands in their consideration set
‍Lapsed: Shopped historically but do not shop currently, as defined by the analysis time period
‍New: Shop currently but have not shopped historically, as defined by the analysis time period

Takeaways

Marketers know it’s more costly to acquire or re-acquire customers than to keep existing ones engaged. When brands neglect current customers, they risk losing them and undoing past investment yet the reasons why a customer might “lapse” is different depending upon their loyalty tier.  Loyalty is fragile and demands ongoing effort as competition is always close by. To stay top of mind, marketers must continuously nurture relationships, understand customer needs, and offer seamless experiences. To foster loyalty with your customers, consider these recommendations:

• Use an “always on” strategy to keep customers engaged, regardless of purchase frequency.
• Regularly update/refine customer segments and adjust reward offers to keep them engaged.
• Use targeted campaigns to boost loyalty and revenue.

Cardlytics can deliver a comprehensive Customer Loyalty Analysis with insights into customer behavior and movement across defined loyalty segments. Contact us for more details.

* For this report, we've selected the entire Apparel category in our data, collectively representing $17bn in annual card spend. This sample differs from the previous Customer Loyalty Analysis report.
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About Cardlytics‍

Cardlytics (NASDAQ: CDLX) is a commerce media platform, powered by our publishers’ first-party purchase data, that makes commerce smarter and more rewarding for everyone. We offer a range of solutions to help advertisers and publishers, including financial institutions, grow and strengthen customer loyalty. With visibility into approximately half of all card-based transactions in the U.S. and a quarter in the U.K., Cardlytics enables advertisers to engage consumers at scale and drive incremental sales through our industry-leading financial media network. Publisher partners can enhance their platforms with relevant and personalized offers that improve the shopping experience for their customers. Cardlytics also offers identity resolution capabilities through Bridg, which helps convert anonymous shoppers into known and reachable customers. Headquartered in Atlanta, Cardlytics has offices in Menlo Park, Los Angeles, Champaign, New York and London. Learn more at www.cardlytics.com or follow us on LinkedIn.

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Big Box Retail: Stop Taking Customer Loyalty for Granted‍

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‍Introduction
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In our previous report, Redefining Customer Loyalty, Cardlytics defined loyalty as a consumer’s preference for a merchant over competitors. We analyzed $160B in spending across six industries to measure customer loyalty and spending patterns with both loyal and non-loyal customers.

But customer behavior isn’t fixed—customers shift between loyalty segments over time. Understanding these shifts helps identify churn and informs strategies to nurture relationships and move customers to higher loyalty segments. In our Loyalty Movement Report, we dive into customer behavior in the Big Box category to better understand engagement over time by analyzing 8 brands with more than $400B in consumer spend behavior.*

Big Box Retailer Category Loyal Customers

On average, 76% of a merchant’s customers are not actually loyal. But the loyal segment has a much higher share of wallet (70%) than a not loyal segment (15%).

Top Customers (top 10% of most frequent transactors) are evenly split between loyal and not loyal customers. But the loyal customer segment shows an almost 3x higher share of wallet.

Findings

We looked into purchase data at 8 big box retailers in the US over the last 8 quarters (Q1-23 through Q4-24) on a quarter by quarter basis to see whether even the “most loyal” customers showed changes in their purchase behavior.

‍Big Box Loyalty Movement

Overall, quarter over quarter, almost 80% of customers tend to remain in their existing segments while 20% increase or decrease their loyalty to a merchant. Yet there is much more extensive customer loyalty movement within the “not loyal” segments. 

Segment Movement

While all segments show purchase behavior movement, the Tied segment (part of Not Loyal customers) shows the most movement - both up (29%)  and down (36%) - into other segments. 

‍Big Box Leaky Bucket

Big Box brands are acquiring new customers yet even more existing customers are moving into the lapsed tier. This cycle can be reversed by continuing to nurture existing customers.

Diving deeper into the individual segments tells us:

• Loyal customers and those that Prefer the competition are the most rigid (with 87% staying the same). Those customers that are Tied have the greatest propensity for a behavior change (with only 32% staying the same).
• Loyal customers are far less likely to churn. Customers that are Tied are 50% more likely to churn and customers that Prefer the competition are 250% more likely to churn!

Definitions of Customer Segments

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Loyal Customers
Loyal: Only shop with a specific brand, or have the highest share of wallet with a given brand and relative rank is lower than all other brands in consideration set

Not Loyal Customers
Tied: Similar relative ranks to 2 or more brands regardless of share of wallet ranking
‍Prefer: Lower share of wallet and higher rank than other brands in their consideration set
‍Lapsed: Shopped historically but do not shop currently, as defined by the analysis time period
‍New: Shop currently but have not shopped historically, as defined by the analysis time period

Takeaways

Marketers know it’s more costly to acquire or re-acquire customers than to keep existing ones engaged. When brands neglect current customers, they risk losing them and undoing past investment - not loyal customers are 50%-250% more likely to lapse/churn than loyal customers. Loyalty is fragile and demands ongoing effort as competition is always close by. To stay top of mind, marketers must continuously nurture relationships, understand customer needs, and offer seamless experiences. To foster loyalty with your customers, consider these recommendations:

• Use an “always on” strategy to keep customers engaged, regardless of purchase frequency.
• Regularly update/refine customer segments and adjust reward offers to keep them engaged.
• Use targeted campaigns to boost loyalty and revenue.

Cardlytics can deliver a comprehensive Customer Loyalty Analysis with insights into customer behavior and movement across defined loyalty segments. Contact us for more details.

‍* For this report, we've selected a sample of 8 of the largest merchants including a mix of online marketplaces, memberships and omni-channel retail, collectively representing over $400bn in annual card spend. This sample differs from the previous Customer Loyalty Analysis report.
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About Cardlytics‍

Cardlytics (NASDAQ: CDLX) is a digital advertising platform. We partner with financial institutions to run their rewards programs that promote customer loyalty and deepen relationships. In turn, we have a secure view into approximately 1 of every 2 card-based transactions in the U.S., allowing us to see where and when consumers are spending their money. We use these insights to help marketers identify, reach, and influence likely buyers at scale, as well as measure the true sales impact of marketing campaigns. Learn more at www.cardlytics.com.

Explore why driving transaction frequency among existing and high-value customers is essential in the pet category.

New from Cardlytics: Our 1st party transaction data suggests that while less and less consumers are spending in the pet specialty retail category every year, those who remain are increasingly valuable for brands to retain. Download the full insight bulletin today!

Since COVID, the Pet specialty retail category has seen impressive growth in spend every year. However, the rate of growth has significantly declined. The leading driver of this slow down is a decline in the volume of Pet shoppers - shopper volume only grew by 1.17% in 2023. There are less category shoppers overall, and less consumers defined as new pet parents.*

Despite fewer shoppers entering the category, existing pet parents are doting on their pets with non-essential purchases.

Of existing pet parents shopping the category in 2023, 9% were considered “doting pet parents” (+2pts vs. 2022) who make non-essential purchases for their pets (e.g. premium natural food).  This category of shoppers spends 2x more than the average pet parent.

What does this mean for you?

Driving transaction frequency among existing and high-value customers is essential to increasing sales long-term, especially when the category competition is fierce. 

‍Download the full insight bulletin, and let’s chat about how Cardlytics can help drive your pet loyalty efforts. Email hello@cardlytics.com to get started.

Sleigh this Holiday Shopping Season

The 2023 holiday season is just around the corner, and this year consumers will be headed to their favorite online and in-store brands earlier than ever! 

As we gear up for the 2023 holiday season, Cardlytics' comprehensive analysis of nearly $380 billion in consumer holiday spending over the past three years equips marketers with essential insights to win more during this critical period. Access our full 2023 Holiday Infographic here. 

Decoding the 2023 Holiday Analysis

Holiday 2022 witnessed a 3% drop compared to the previous year, attributed to reduced spending per customer, fewer transactions per customer, and slower growth in average transaction size. Given the lingering economic challenges from the previous year, brands need inventive strategies to incentivize consumer spending during this holiday season.

Interestingly, a shift in spending behavior has been observed, with holiday spend moving back to brick-and-mortar retailers from online channels. This contrasts with the Back-to-School analysis by Cardlytics, which saw online spending was up for both B&M.coms and online only brands. This shift underscores the significance of an omni-channel approach, ensuring that brands are present where consumers choose to shop, whether in-store or online.

Early Birds and Mass Merchandisers

An intriguing trend emerging from the analysis is the increasing percentage of spending occurring within the initial three weeks of the holiday season year over year. Consumers are diving into their shopping lists earlier and earlier, demanding that brands engage with them during this period.

When it comes to dominating the holiday market share, Mass Merchandisers are the frontrunners, holding a whopping 58% of the total wallet share. As consumers grow more price-conscious, Mass Merchandisers are poised to leverage this shift in consumer behavior to their advantage. The Apparel category is also gaining momentum, presenting an opportunity for brands to bolster their presence and profits.

Unwrap the secret to success with Cardlytics 

Through strategic partnerships with banks, Cardlytics possesses an extraordinary advantage - access to the transaction data of over 186 million consumers. This invaluable resource empowers brands with a detailed understanding of consumer purchasing patterns, offering a holistic view of when, where, and how people shop.

The holiday season is approaching rapidly, and with it comes the opportunity for retail brands to acquire new customers and grow loyalty with existing shoppers. In this competitive landscape, making informed decisions is crucial to stand out from the crowd. That's where Cardlytics comes into play, providing real insights from real bank customers to support retail brands in navigating the complexities of the upcoming holiday season. Get started today.

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Class Is In-Session

Back-to-School continues to be one of the largest shopping events of the year, and once again, Cardlytics is here to inform on the latest consumer trends. Our analysis of over $122B in BTS spend over the last 3 years sheds light on YoY trends, category-level insights, and more. Now more than ever, brands should leverage these insights to create informed, strategic marketing plans and drive long-term customer loyalty.

Back to Basics

While spend is up 3.8% YoY, it is growing at a slower pace than previously observed. Not exactly a surprise given the COVID lockdown, but it seems that the spend bounce back we saw last year has slowed, especially considering the current economic pressures.
The same slow in overall spend can be observed across purchase volume as well, indicating consumers may be consolidating their Back-to-School errands with other shopping trips (e.g. grocery, home, etc.)

DOWNLOAD THE INFOGRAPHIC

Brick and Mortar Shoppers Played Hooky This Season

Online spending is up for both B&M.coms and online only brands, indicating that the shift initially brought on by COVID is likely permanent. Brands should consider an omni-channel approach in order to engage the customer where they are spending.

Mass Merchandisers Pass with Flying Colors

Mass Merch continues to dominate as inflation drives customers to keep price top of mind. While all other subcategory spend is down in 2022, Mass Merchandisers are up 9.2% vs. 2021. In fact, Mass Merch is the only category to have YoY growth across all metrics – spend, trips, and customers – in the last 2 years. Branded retailers should ramp up engagement with existing customers to prevent churn. Get the data.

Cardlytics Helps You Make the Grade

As consumer spend begins to slow, and pressure mounts from competition, it’s never been more important to create value for the consumer, and drive brand loyalty. CDLX’ whole-wallet-view of customer spend can help identify your most relevant target audiences and unlock incremental sales – and we can prove it.

Request the data: 2023 Back to School Infographic

The ongoing rise in the cost of living has altered the way Brits approached spending in the last 12 months – with the Christmas period providing a clear indicator of today’s state of play. Spending year-on-year flatlined with the average transaction value sitting at around £33 for Christmas 2022 and the previous year.

Retail spending increased by less than 0.5% year-on-year in the last 11 days of 2022 –reaching nearly £442m, up £2m on 2021.

With Christmas being such a critical moment for retailers this flatline comes as a disappointment as the sector continues to shoulder the impacts of higher inflation and declining discretionary spend amongst shoppers.

That said, the Boxing Day sales provided a much-needed boost for retailers following adulled ‘Golden Quarter’. The average amount spent daily by consumers rose 18% betweenChristmas Day and New Year’s Eve last year, compared to immediate build-up to Christmas(21st -24th December 2022), with shoppers taking advantage of discounts as the cost of living continues to squeeze households.

Electricals, online fast fashion and marketplaces sales fall

Consumer spend on electricals saw a second-year of decline, as consumers reigned in their spending on big ticket items like devices, televisions and games consoles. UK electricals purchases have dropped by 20% over the last two years.

Online fast fashion retailers also experienced a slump in sales, with spend falling 42% from 2020 levels as consumers return to the high street for their wardrobe updates.

Digital marketplaces saw a 9% decline in spend year-on-year, following a period of growth between 2020 to 2021. And despite inflation hiking prices, buyers also appear to be turning away from previously loved furniture and other second-hand goods.

High street fashion, sports apparel and home improvements see gains

Despite an overall plateau in spend across the retail sector, spend in high street fashion stores, like Zara, H&M and Next, has risen 29% over the last two years – with consumers hitting the high streets to cash in on Christmas and Boxing Day deals.

Sporting goods brands - such as GymShark, Sports Direct, JD Sports - saw a 17% uptick in spend in the same two-year time period, with fitness-based new year’s resolutions fuelling prolonged sales growth.

Buyers have been turning to sales as a chance to invest in value homeware, with brands like IKEA, Dunelm and B&M recording a 12% increase on 2020 levels of spend.

While this is undoubtedly a difficult time for households - and bigger ticket purchases appear to have been put on the back-burner - consumers still want to cash in on potential deals, find ways to update their homes and wardrobes, whilst also doubling-down on their fitness goals in the new year.

As we go deeper into 2023, this is an opportunity for retailers to invest in building long-term customer engagement and loyalty. Through schemes such as rewards, discount ranges and personalised marketing, brands can deliver tailored savings and money back to their customer-base, at a time when it’s most valued. Unfortunately, the cost-of-living crisis isn’t going away anytime soon, so as belts continue to tighten, delivering savings through tailored rewards could be the difference that keeps customers engaged and onboard.

Sitting at the halfway point of the Golden Quarter, Black Friday is a crucial bellwether on consumer spending, indicating how retailers are performing and what they can expect over the critical festive period. This year saw Brits spend nearly £10 million less than in 2021 as rising inflation and the cost-of-living crisis tightened consumers’ belts.

A recent survey by Cardlytics found that over half of consumers (53%) plan to put fewer presents under the Christmas tree this year. At the same time, a similar number (46%) have said they have started shopping for presents earlier in order to spread the cost.

So, what effect did this have on Black Friday sales this year and what insight can this give us into the outlook for retailers this Golden Quarter?

Tighter budgets impact traditional Black Friday winners

Cardlytics spend data across 24 million UK bank accounts shows that total spend across key retail verticals this Black Friday weekend was £220 million – a reduction of 9% year on year. Black Friday itself saw a 6% dip in the number of transactions when compared with 2021.

Strikingly, the categories that took the biggest hit were those most often associated with Black Friday. Fashion and clothing saw some of the largest declines, with spend at fast fashion brands decreasing 30% year on year and the number of transactions declining by 31%.

It was a similar story for luxury brands which saw spend down 23% year on year and transactions dip by 17%.

Make-up and electrical goods, two sectors traditionally targeted in the sales, also saw weaker activity across Black Friday with spend falling 18% and 19% respectively.

Sales of less traditional Black Friday categories have fared somewhat better. Sporting goods were the standout stars this year seeing spend increasing by 2% compared to 2021 and transactions declining by 1%.

Learnings for Christmas

With people planning to spend less on festivities this year, and a weaker Black Friday than previous years, the Golden Quarter is likely to lose some of its shine for retailers. Consumer prices are continuing to increase and discretionary spend is on the decline, resulting in increased levels of caution around spending. Spend is shifting away from ‘aspirational’ items and gifting for Christmas to more practical, everyday purchases such as sporting goods.

We also know that consumers are looking for value from their shopping with nearly three in five (57%) planning to spend more time searching for deals for gifts. Retailers can tap into this by focusing on core product ranges that give customers value for money and by offering tailored discounts on the products they need the most – be it for gifts or when thinking about the January sales.

Are sales enough?

As Black Friday has shown, blanket discounts aren’t enough to get consumers through the door anymore. News stories have pointed to Black Friday discounts being less significant than they appear, resulting in a seemingly increased level of scepticism around such sales.  

As retailers look to Christmas and the frenzy of Boxing Day sales, this is an opportunity to take a more personalised approach to consumers – offering them tailored discounts on the brands and items that mean the most to them based on their shopping habits.

In times of financial challenge, helping people feel they have got a genuine deal on items that are worth buying has become more critical than ever and will help to build loyalty for brands in the long run.

Retailers have long been aware of the requirement for personalisation to drive sales and customer loyalty. As the cost of living crisis deepens, the need for this personal touch will only intensify – and those that can deliver on this, learning from Black Friday, will be the ones that build brand loyalty for the long-term, driving clear outcomes for the top and bottom lines.

Headlines professing the challenging impact of the cost of living crisis on retail are everywhere at the moment. From sky high inflation, astronomic delivery and rent costs, to reports of dwindling consumer spending, the outlook is tough for retail.

Our new spending report found that four in five (79%) consumers are spending more on day-to-day outgoings than they did a year ago, with three quarters (72%) saying they plan to cut-back on non-essential spending this year as the cost-of-living continues to rise. 

But as consumers tighten their purse strings and re-prioritise spending, that doesn’t mean there aren’t opportunities that high street retailers can capitalise on. 

We’re already seeing spending patterns start to shift as budgets tighten, with more emphasis on more affordable little luxuries than bigger ticket items. 

But the real opportunity for high street brands is how they can capitalise on the fall in spending on luxury and designer brands. 

Spend on luxury and designer brands fell 7% in the first 6 months of 2022 compared with 2021, while the number of transactions at luxury brands dropped 10% in the same period. This proves that consumers aren’t just spending less on designer and luxury goods, but are turning away from these brands altogether.

This downward trend looks set to continue into next year, with over half (59%) of consumers planning to spend less on luxury goods this year, while a further half (48%) plan on switching to cheaper brands for clothing and homeware as the cost-of-living bites.

This is the big opportunity for the high street. When recessions hit, consumer desire to purchase and treat themselves doesn’t go away, it simply changes shape. As shoppers choose to spend less and spend better, moving away from designers, the need to replace items or buy clothing won’t dissipate. The key for high street brands will be how they can capture this spend. 

Traditional high street retailers are already benefiting from the gap that luxury leaves, with both total spend and the number of transactions at high street fashion brands up 11% in the first six months of 2022 compared with 2021 as consumers ‘trade down’ when shopping.

As the cost-of-living crisis continues to bite, high street fashion brands should position themselves as a great value alternative for quality designer goods to encourage people to make the shift away from luxury shopping. 

To do that, serving luxury and designer shoppers relevant rewards and offers on the categories they shop the most can help divert spending.

Banking channels are an effective way to target these higher spending customers – targeting specific customers in the channels they already operate in with the brands they love to encourage switching and spending. 

This doesn’t mean that retailers must engage in a race to the bottom on price, keeping price lines reassuringly expensive for this shopper set can help make the switch more appealing. 

As shoppers prioritise their spending, and move away from luxury and designer purchases, high street brands that invest in this group now will expand their market share in the long run.

Download the UK State of Spend report here.