The final three months of the year, often termed as the golden quarter, hold critical importance for retailers. Despite a consistent downturn in retail spending this year or reliance on discounts that heavily cut into margins, industry experts anticipate that pent-up consumer demand will provide a necessary uplift during the holiday season.
Amidst fluctuating consumer confidence, there is nonetheless a unanimous belief among retail specialists that this golden quarter encompassing key shopping dates such as Black Friday, Cyber Monday, and Christmas could spell the strongest retail performance since before the pandemic struck, as reported by .
Retail consultant Miya Knights said that an "increase in spending power for many people", coupled with "pent-up demand from consumers holding off larger purchases until the promotional period" should bolster retail fortunes.
A survey conducted amongst the sector's pundits also referenced moderating inflation, higher wages, and solid savings accumulations as positive signs of a vibrant holiday trading period. Furthermore, Nick Bubb of Bubb Retail Consultancy suggested the anticipated fourth-quarter sales resurgence is partly due to "a replacement cycle that is underway on all the technology that was bought by consumers for working at home during the pandemic."
He noted that "Retailers will look to capitalise on that ahead of Christmas, helped by the stimulus from lower interest rates and new AI-linked product launches."
Jonathan De Mello, founder and CEO of JDM Retail, pointed out that despite the economic challenges many households face, "demand for Taylor Swift and Oasis tickets, [plus] electronics purchases related to the sporting action at the start of the summer, are examples that when the desire... is there, there's still plenty of consumers willing and able to spend."
A fly in the ointment?
However, potential obstacles remain. While further cuts to the base interest rate in November and December could bolster consumer confidence, tax increases announced in the Autumn budget could undermine it.
Consumer confidence took a hit in September ahead of the budget, with Labour's bleak narrative about the black hole in public finances and media speculation about how this deficit might be addressed impacting attitudes nationwide.
"The conditions are there for a decent end to the year for the retail sector," said Linda Ellett, º£½ÇÊÓƵ Head of Consumer, retail and leisure at KMPG.
"However, consumer confidence remains fragile and until interest rates fall further it's important that the Budget doesn't scare consumers into sitting on savings for longer", Ellett added.
This is especially crucial for retailers, as working families represent their largest group of consistent spenders.
"Caution still remains the watchword, as this recovery is as fragile as it is promising," warned John Choong, head of equities and markets at Investors Edge. "A misstep on 30 October could easily derail the sector's recovery."
Why is the golden quarter so important for retailers?
The golden quarter holds tremendous significance for retailers as it is typically their most lucrative period, often generating the majority of their annual revenues.
This period encompasses major shopping events such as Black Friday, Cyber Monday, and Christmas. In the year 2023, º£½ÇÊÓƵ shoppers reportedly splurged around £13.3 billion just over Black Friday.
The preceding two years have been challenging, especially for smaller businesses, with the cost-of-living crisis, industrial strikes, and international instability all impacting trade.
The previous year saw BDO's high street sales tracker note its worst December performance since records began, highlighting the difficult climate for retail enterprises.
This context elevates the importance of this years golden quarter, with retailers battling to remain viable following numerous industry shutdowns in recent times.
British Retail Consortium chief Helen Dickinson has labeled the upcoming months as "crucial" for the sector, noting that retailers are "holding their breath" in anticipation of spending figures and the impending budget.
