Almost three in ten consumers plan to spend less in the festive period this year than last year, reflecting the impact of the ongoing cost-of-living crisis according to research by Deloitte.
The data also shows a rise in the number of UK consumers who intend to spend more in the last three months of 2023, with the proportion up from 19% in 2022 to 26% this year. It was also found that many UK consumers are looking to spread their spending across the quarter, with 32% planning to buy most of their gifts in November, taking advantage of Black Friday and Cyber Monday promotions.
More respondents this year also said they plan to buy their presents in-store (50%) when compared to those surveyed last year (47%).
Oliver Vernon-Harcourt, Head of Retail at Deloitte, said “The long-term impact of the cost-of-living crisis has supressed consumer spending power, but it appears as if consumers are still willing to spend more at Christmas by prioritising it over other spending.”
“The Black Friday and Cyber Monday weekend promotions are critical for retailers, and we expect overall spending to increase again this year as consumers try make the most of the available sales on offer. For retailers, product, price and availability, combined with great in-store customer service, will be key to secure their share of the market during the festive period.”
“With more consumers planning to increase their budgets for Christmas, discounters and supermarkets might be the winners during this highly competitive period. However, high street shops will need to work even harder to attract customers to compete with online rivals.”
“Some shoppers will remain cautious with their spending during the upcoming winter months because of high energy and fuel prices. Those consumer businesses that focus on creating a good customer experience, through engaging promotions and convenient offerings, such as click and collect and extending store hours, will help attract thrifty shoppers.”
The research which comes from the Deloitte Consumer Tracker, one of the biggest quarterly surveys of its kind, captures consumers’ views on their finances, spending habits and the economy.
It found that UK consumer confidence in Q3 2023 improved for a fourth-consecutive quarter, increasing by two percentage points to its highest level since Q4 2021. The sustained improvement means the confidence levels are moving closer to its long-term average indicating that pressures on consumers are easing.
Céline Fenech, Consumer Insight Lead at Deloitte said “Four consecutive quarters of growth in consumer confidence provide further evidence of the UK consumer’s ability to adapt to challenging economic circumstances. Wages have been growing faster than prices for several months, helping to bolster household finances from the impact of higher interest rates.”
“Consumers have also shown a degree of resilience throughout the cost-of-living crisis, adopting recessionary behaviours, such as buying supermarket own-brand goods, to maintain their standard of living and cope with unexpected price rises in the cost of energy, housing and food.”