More than 85% of UK retailers plan to offer steeper festive discounts. This is a seismic increase when compared to the last two years where only 54% in 2023 and 57% in 2022 planned to offer higher discounts. This is according to Fiverr International Ltd who released data on how small and medium UK retailers are gearing up to tackle an unpredictable festive shopping season. Fiverr surveyed 2,539 consumers and 2,508 small-to-medium business leaders globally. They included 500 consumers and 500 business leaders in the UK, in partnership with Censuswide.
Key trends that emerged from the data include:
Cost-conscious Brits push UK retailers to slash prices
- 70% of UK retailers expect sales to increase this year compared to last year. However, this is less than a quarter (23%) of Brits plan on spending more this year compared to last year.
- UK’s cost of living crunch continues to impact shoppers as a third (32%) prioritise good deals when shopping.
- Frugality increases with age. 40% of 16-24-year-olds said they will spend more whereas only 21% of 45-54-year-olds are willing to spend more. This significantly drops to 8% for 55+.
A disconnect between shoppers and retailers this festive season
- For retailers, using AI tools to expedite work is the number one marketing strategy for two years in a row. 69% of respondents plan to invest in AI this year. Of the retailers investing in AI, 31% will embed AI in their entire customer journey.
- The more employees a UK retailer has, the more likely they will be to use AI. 73% of businesses with 50-99 employees will use AI (73%), rising to 87% for companies with over 100 employees.
- British shoppers are reluctant to use AI this festive season. 73% of Brits don’t use AI for Christmas shopping and 39% will not consider using it for this purpose.
- Google search is the top way people plan to shop this festive season (37%). This was closely followed by shopping in-store (31%). Despite this, investment on in-store promotional activity continues to be low on the list for UK retailers three years in a row. 22% say they will reduce investment in this area in 2024.
UK retailers continue to face the same challenges year-on-year
- The top 3 challenges businesses will encounter this festive season remain the same as last year. SMEs continue to feel the weight of big brands like Amazon. Almost half (49%) of respondents said competition from larger e-commerce brands and inflation-impacting sales were their greatest challenges. These were closely followed by supply chain disruptions or inventory shortages (38%).
- Only 17% of SMEs surveyed are not planning to reduce investment, compared to 31% the previous year.
- Digital marketing tools are the top area where UK retailers plan to invest the most this year as part of their festive season strategy with social media ads continuing to be a top 3 investment in three consecutive years (40%).
- Hiring seasonal workers is the top avenue retailers take when seeking additional support during the festive season (61%). Businesses are looking to freelancers. 31% relied on freelancers to support them during the festive season for 2 years in a row now.
Bukki Adedapo, Fiverr International Expansion Lead said, “As we approach peak shopping season. Retailers will not only need to overcome ongoing macro-economic obstacles but also tailor their approach to changes in consumer behaviour. The cost of living crunch continues to impact both shoppers and retailers. So being smart with investment will be crucial in the coming months. It’s promising to see that freelance support has not faltered as businesses continue to rely on this group.”
Methodology
Censuswide conducted the survey for Fiverr among 2,508 SME owners and managers (aged 18 and over) in retail or eCommerce. (excluding sole proprietors) and 2,539 consumers between July 25, 2024 and August 5, 2024 in Germany, Great Britain, the USA, France and Australia. 500 SME owners and managers and 500 consumers were surveyed from the UK. Censuswide adheres to the ESOMAR principles and employs members of the Market Research Society and is a member of the British Polling Council.
Enterprise Times: What this means for businesses.
The retail sector has been undergoing radical change for a number of years. Various digital technologies have increased the efficiency and accuracy across all aspects of retail business. As a result, brands and retailers are more effectively acquiring good customer data, which requires analysis.
This report indicates that retailers will have no choice but to invest in AI to enable a better understanding of customers. This is largely due to advanced data and predictive analytics systems that are helping companies make data-driven business decisions. AI in retail is now supporting businesses with high-level data and information that is leveraged into improved retail operations and new business opportunities.
Hence, retailers are now utilising AI to support and curate marketing efforts. In fact, it is estimated that $40 billion of additional revenue was driven by AI in retail in a 3-year span. Analysts expect this trajectory to continue to rise in the foreseeable future.
