Consumer sentiment remains buoyant

Consumer sentiment has rebounded to pre-pandemic levels according to fresh data from PwC UK, which shows that at -1, sentiment is now in line with levels seen between 2015-19, and is now better than at any point between 2008-14. It is a significant turnaround from the low point of -26 recorded the weekend before the first national lockdown, and an improvement on the -11 figure recorded in June prior to restaurants and pubs reopening.

The UK-wide consumer sentiment survey – which charts the opinions of over 2,000 adults and was conducted in mid-September before the most recent restrictions were introduced – shows that despite widespread economic concerns, consumers still feel cautiously optimistic. Sentiment has improved across all age groups and regions with those aged 65 and overseeing the most dramatic shift, having gone from the most pessimistic in previous years to being right on the national average. Those aged between 18 to 24 are once more the most positive, despite uncertainty around education and jobs.

In addition, local lockdowns have seemingly not had an impact on household finances, with consumers living in the North East, North West and East Midlands, overtaking London as the most optimistic regions.

However, there is still a question as to whether this financial optimism will translate into actual spending on the high street. For example, around half of all respondents say they expect to spend less on going out, eating out and holidays, unsurprising, given the current restrictions in place. By contrast, many shoppers say they plan to continue spending on grocery and home improvement, while technology spending has become more important for over 65s in order to keep in touch with their families and friends.

Lisa Hooker, Consumer Markets leader at PwC, said “Despite the steep challenges facing the country, it’s heartening to see that consumer sentiment remains resilient and has been improving steadily since the start of the nationwide lockdown in March.”

“Consumers are telling us that when it comes to their household finances, they remain optimistic, and although retailers will welcome this news, the devil is in the detail. Consumers have money to spend however when asked in what areas they plan to spend more or spend less on, the only categories where they plan to increase spending on was grocery and home improvement.”

“This optimism has translated into a bounceback for retail sales since the first lockdown ended, albeit consumers are spending on different categories and more online than on the high street. While retailers will be hoping that this V-shaped recovery is sustained, leisure’s loss may be retail’s gain. However, retailers can’t afford to do what they’ve always done and expect results.”

“The news is good for grocers and home improvement retailers, but for retailers in categories like fashion or for those in the hospitality and leisure sectors especially, we’re likely to continue to see testing times ahead.  For now, retailers and hospitality operators should continue to do what they can to shore up business, by attempting to embed longer-term resilience plans, capitalising on emerging consumer trends or embracing new business models where they can.”

The positivity emanating from this survey appears to be down to most people simply having more money. Whether through government stimulus (such as the Coronavirus Job Retention Scheme) or saving money due to going out less and cancelled holidays, more than 60% of people polled have either not been financially affected or have saved money since the start of the lockdown in March. By contrast, only 3% have lost all of their income, and only 11% have lost some of their income. And looking ahead, only 8% of those asked think that they will lose some or all their income in the next 12 months.

Remarkably, only 16% of over 65s say they have experienced any financial pressure in the last six months, perhaps explaining the significant improvement in their sentiment. By contrast, 53% of under 25 year olds have been affected, through either income loss or having to cut back on their spending, yet this group continues to remain the most positive.