How to keep footfall and sales high despite decreased consumer spending

The September 2022 ONS Retail Sales data has highlighted a drop in consumer spending and confidence, leading to a decline in sales volumes. However, with peak approaching, retailers still have time to capitalise on what is likely to be the busiest period of the year.

This article looks at the stats behind the decreased consumer spending and shares top tips for retailers to use this as an opportunity to meet changing demand.

Key findings from September 2022 ONS Retail Sales Figures

The September 2022 ONS Retail Sales Figures have showcased a drop in retail sales and decreased consumer spending, however online retail continues to remain elevated in comparison to 2020 levels.

• Retail sales volume fell by 1.4% in September 2022, dropping down to 1.3% below pre-coronavirus February 2020 levels
• In the three months leading up to September 2022, sales volumes fell by 2% in comparison to the previous three months
• Non-store retailing (predominantly online retailers) fell by 3% in September 2022, however despite this, sales volumes remain 18% above February 2020 levels

How decreased consumer spending will impact the industry

While there may have been a decrease in consumer spending, there is an uplift expected in the coming weeks.

Silvia Rindone, EY UK&I Retail Lead, explains:

“Non-store retail continued its downward trajectory, falling 3% in September. However, as we enter the ‘golden quarter’, and with Black Friday a few weeks away, this may change. The latest EY Future Consumer Infex (FCI) found that nearly two-fifths (41%) of shoppers are planning on doing most of their deal hunting online this year. The news will be welcome to many pure-play online retailers, particularly fashion retailers, who have been experiencing high commodity prices, rising delivery costs and product returns as well as issues with excess stock.

“The biggest challenges for retailers this Christmas will be pricing, inventory and how to deal with falling demand. The latest EY ITEM Club Autumn Forecast expects the UK economy to be in recession until the middle of 2023 so against this backdrop of increased uncertainty, consumers are likely to delay spending as late as possible to help manage their finances. Many retailers have already started heavy discounting to tempt shoppers to bring forward their Christmas spending.

What can retailers do to overcome decreased consumer spending?

Shrinking consumer confidence is expected to reduce demand, however, retailers can still capitalise throughout peak and beyond, while offering shoppers the things that they need.

In a similar way to how the pandemic forced retailers to rethink their offering and consider the best ways to meet their customers’ needs, the cost of living crisis is expected to see retailers hone in on offering value and stand-out experiences.

Here’s what retailers can do to overcome decreased consumer spending:

Don’t wait too late to offer Black Friday deals

As shoppers search for bargains, many are already making a start on their Christmas shopping. It’s important not to wait too long to promote Christmas products and showcase discounts, otherwise as some shoppers may have already spent their Christmas budget by then.

Nikki Baird, VP of Strategy at Aptos commented: “Shrinking consumer confidence brought on by inflation may not bode well for consumer spending as we enter peak retail season. UK consumers will be making savvy shopping decisions through necessity. Looking ahead, acute concerns about the cost-of-living shock are likely to bring a Christmas shopping season like no other, with consumers taking control into their own hands by front-loading their spending.

With a renewed focus on locking in the best bargains, we could see that many will have drained their holiday budgets even before Black Friday hits. This new sentiment needs an urgent retail response. It’s a big risk to assume that consumers will still have budget left in December – it would be a mistake to wait till then when offering deals.” 

Focus on offering value to customers

With the cost of living crisis resulting in people looking to cut costs wherever possible, a shift is expected towards people buying mainly necessities, as opposed to treating themselves.

Silvia Rindone, EY UK&I Retail Lead, added: “As consumers become more cautious about what they spend their money on, retailers and brands will need to ensure they plan and position their offers this year for small, more intimate events and more thoughtful gifting which focuses on usefulness rather than indulgence.”

Create instore experiences

Having the ability to create irreplaceable instore experiences will continue to encourage footfall, tempting shoppers instore if you are able to make it an enjoyable experience.

Melissa Minkow, Director, Retail Strategy at CI&T said: “Retail sales fell further in September by 1.4% as consumers reigned in spend amid a spiralling cost-of-living crisis. With inflation now jumping above 10%, consumers simply don’t have the luxury to spend excessively on non-essential items. For these reasons, it’s likely Black Friday will carry greater significance this year, as consumers hold out for the biggest discounts in order to save money on Christmas shopping bills.    

“Approaching the festive season, although retailers will struggle this year, it’s likely that brick-and-mortar will remain relatively resilient. The joy has not gone from the in-person shopping experiences and people can still experience a festive day out with friends and family without spending too much. Brands need to focus on these moments, enhancing the in-store experience to drive more footfall. Amidst rising prices and energy bills, just getting people into the store should be seen as a big victory this year and can have a snowball effect on sales.” 

How to keep footfall and sales high despite decreased consumer spending

Despite decreased consumer spending, the secret lies in offering the things that shoppers need and desire most. The use of data and customer research can guide buying decisions, while streamlining the purchase process, removing any barriers and creating a memorable experience that is likely to boost loyalty will help to keep footfall and sales high this peak season.