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US wants to boost spending, Europe holds back amid cost-of-living crisis

by SuperiorInvest

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

Richard Baker | In the pictures | Getty Images

Black Friday may offer an opportunity for bargains ahead of the holiday season, but many shoppers will expect retailers to cut prices by a wider margin this year as they tighten their belts amid a worsening cost-of-living crisis.

Shoppers in Europe plan to spend almost a fifth less during this year’s sales season as inflationary pressures weigh on consumer sentiment. research from the Boston Consulting Group this month.

Consumers in the UK are set to shrink by the largest margin in the region, spending 18% less, while France and Germany plan to cut spending by 15% and Spain by 13%.

US consumers were the only nine countries surveyed, which included Australia, to say they expected to spend more this year, increasing their spending 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 soaring.

Great Britain is already in recessionconfirmed last week by the independent Office for Budget Responsibility.

That piles pressure on retailers already struggling to recover from the Covid-19 slowdown and attract increasingly cost-conscious consumers. Meanwhile, many companies, struggling to make up for last year’s supply shortages and problems, have built up huge stockpiles that are now under pressure to move.

What we have seen is the spread of the Black Friday trend.

Kristy Morris

Managing Director, Commercial Solutions, Barclays Payments

“Black Friday is a critical moment in the shopping calendar for brick-and-mortar and online retailers, who are still recovering from the Covid pandemic and now face consumers in many markets who are scaling back their spending plans on many non-essential items,” Jessica Distler, BCG Managing Director and Partner, stated in the report.

This could lead to retailers extending their discounts throughout the month and increasing shopping options for consumers with money to spend.

The growing risk of purchase fraud

According to new data from Barclays Payments, one of the country’s leading payment processors, transactions in the UK grew by 3.8% year-on-year in the week leading up to Black Friday.

Kristy Morris, managing director of commercial solutions at Barclays Payments, told CNBC on Thursday that this could mean shoppers will be more inclined to spread out their shopping over the Christmas season.

“What we’ve seen is the propagation of the Black Friday trend. We’ve seen it spread through the week and actually beyond into the month,” Morris said.

“Some of that can potentially drive some of the Christmas shopping and consumers are thinking about how they should be more savvy about how they spend Christmas,” she added.

Still, experts urged shoppers to be careful when taking advantage of discounts this festive season.

John Davis, UK and Ireland director at cyber security organization Sans Institute, said online hackers are known to “turn up the heat” during discount periods, especially when shoppers are under pressure to get a deal.

Indeed, shopping fraud increased by 34% after last year’s Black Friday and Cyber ​​Monday weekend, according to Barclays research.

“Cybercriminals are dealing with attacks that are more frequent, more sophisticated and harder to detect than ever before,” he said.

Davis urged consumers to be extra vigilant when shopping online and to avoid making hasty or panicked decisions for “fear of missing out.”

“Opportunistic hackers will try to create a false sense of urgency, so it’s important to exercise caution by staying aware of scams, trusting your instincts and building security into all of our online behavior,” he added.

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