Key Insights from GfK’s Q2 2024 Retail Event
Current Retail Trends Amidst Economic Challenges
Consumer Confidence:
- Consumer confidence is on an upward trend, despite still being low. The score improved to -21 in March 2024 from -45 in January 2023.
- Spending patterns indicate that consumers are spending more money but purchasing fewer items, with a notable increase in value but a decrease in volume compared to pre-pandemic levels (2019).
Impact on Product Categories:
- Almost all retail categories have seen a decline, with the exception of Small Domestic Appliances and DIY & Garden, which have recorded modest value growth.
- Consumers are delaying upgrades and opting to replace faulty items only when necessary.
Changes in Credit Usage Post-COVID
Increased Reliance on Credit:
- Approximately 18% of consumers are now using savings or incurring debt to manage daily expenses.
- Credit card usage and other loans have risen by 9% over the past year (to January 2024).
- “Buy Now, Pay Later” schemes have gained popularity, especially among young adults aged 18-24, with Electronics and Clothes being the most common purchases.
Retailer Credit Schemes:
- These schemes are becoming crucial in influencing retailer choice, particularly for high-value items like TVs, Laptops, and Tablets.
- Higher-income consumers are increasingly using credit to upgrade their tech gadgets.
Sustainability in Purchasing Decisions
Preference for Energy-Efficient Appliances:
- Appliances with high energy ratings (A and B) have seen significant growth (51% and 35% respectively) in 2023 compared to 2022, while lower-rated models (C to G) have declined by 9%.
- Energy efficiency is also becoming a key consideration for products like TVs, Small Domestic Appliances, and Mobile Phones.
- One-quarter of mobile phones sold in the UK in 2023 were second-hand or refurbished, driven by a 36% increase in demand since 2021.
Black Friday 2024 Projections
Spending Trends:
- Although spending during Black Friday 2023 was slightly up from 2022, the volume of purchases was lower.
- Older products are becoming a focal point during Black Friday sales, with newer products contributing less to total sales compared to previous years.
Promotional Activity:
- Increased and deeper discounts, such as those seen for Air Fryers in 2023, have led to higher sales in both value and volume.
Brand Loyalty vs. Own Labels
Consumer Preferences:
- Traditional and higher-income shoppers remain brand loyal, while online shoppers place more importance on retailer brand trust.
- Premium brands are outperforming standard and lower-priced brands in the Tech & Durables sector.
Online Shopping Dynamics:
- Online shopping continues to rise, with digitally native brands maturing and consumer demand stabilizing.
Market Concentration in Tech & Durables
Sales Distribution:
- A reduction in the percentage volume sold in a product’s release year has been observed, influenced by economic factors and changes in seasonality post-COVID.
- A small percentage of SKUs account for the majority of value in key product groups, highlighting the importance of a well-curated product range.
For more detailed insights, you can visit GfK’s official site and their recent reports on retail trends.
itim Group plc (LON:ITIM) is a SaaS-based technology company that enables store-based retailers to optimise their businesses to improve financial performance and effectively compete with online competitors. Itim adds retail value by helping multi-channel retailers optimise their business and their stores to improve financial performance and compete more effectively with the “Amazons”.
