EY UK Future Consumer Index: shoppers cut back spending for Christmas
Consumer intentions are always closely watched at this time of year and in 2022 even more so as studies come thick and fast informing us that shoppers will be reining-in their spending.
The latest is the EY Future Consumer Index that tells us nearly half of UK consumers (43%) expect to spend less over the festive season compared to 22% feeling that way this time last year.
The survey of over 1,000 UK consumers found that 12% of shoppers will be cutting back on celebrations and expect to have smaller events this festive season, which could also suppress their interest in buying new clothes.
Some 67% are now ‘extremely concerned’ about the rising cost-of-living so spending on gifts will be significantly lower with 43% of consumers set to cut back on gifts for friends, and 34% on gifts for family.
It’s interesting that the survey also found the number of consumers who do their bargain-hunting in-store is growing, although e-tail remains important with 41% of shoppers planning on doing most of their deal-hunting online this year.
EY said consumer confidence was at an all-time low when it surveyed UK consumers just after the mini-Budget in October, with just 26% of respondents feeling upbeat about the future, down from 50% in June. Sixty-nine per cent of consumers said they didn’t expect the economy to recover in the next 12 months, much higher than the 31% who felt that way in June, while 43% of consumers expect to be financially worse off in 12 months’ time.
And it said a trend identified in its last report in June — by which there’s a widening gap between cash-strapped consumers watching every penny and those willing and able to spend if retailers can entice them to do so — is continuing. High-income consumers are much less likely to see themselves as being financially worse off this time next year (14%) than low-income consumers (51%).
It all means it’s no surprise that 47% of those surveyed expect to spend less on clothing.
But responsible consumerism may not necessarily suffer as spending cut-backs are also being driven by sustainability concerns rather than just by the cost of living. More than three-quarters (79%) of consumers said they don’t feel a need to keep up to date with fashion trends and more than two-thirds (68%) said they’d prefer to repair rather than replace.
Silvia Rindone, EY UK&I Retail Lead, said: “As consumers look to cut back spending, retailers and brands will need to understand the price sensitivity of their customers and react accordingly if they want to continue to win spend in the run up to Christmas.
“Navigating this will require retailers to cater to financially resilient high-income consumers, while also appealing to mid- and low-income consumers with value-focused ranges and pricing that reflect their budgets.
“Consumers are going to be focusing less on indulgence and more on usefulness, so retailers and brands will need to ensure they have the right products in stock for smaller, more close-knit events and thoughtful gifting.
“While affordability is a major concern for consumers, they still want to do the right thing from a sustainability perspective and responsible consumption ticks the box for both priorities. This shift towards more considered shopping behaviour will have profound implications for brands and retailers, as consumers start to prioritise durability and quality over fashion.”
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