Research by PwC suggests that shoppers are preparing to unleash a wave of spending after consumer confidence hit its highest level since before the 2008 financial crisis.
A significant improvement to +8 on the consultancy group’s latest Consumer Confidence Index shows many consumers have more disposable income and a pent-up demand to spend after a year of lockdown restrictions.
PwC stated that improvements in consumer confidence have been seen across all demographic groups and all regions around the UK, with the over-65s demographic driving the increase. The only age group to be more confident is the under-35s who are historically the most optimistic.
The vaccination rollout is partly responsible for optimism among the older age categories. At the time of the survey, the over-65s and many over-55s would have been offered at least a first vaccine and these groups were noticeably more positive than those aged 45-54, a reversal of what PwC saw in January.
Furthermore, the older age groups have been least financially affected by lockdown, as measured in November last year, seeing no negative financial impact and over a quarter of over-65s, 28%, have saved money during the pandemic.
While optimism has recovered across all age groups, PwC highlighted that those under-45 are less positive than they were two years ago in March 2019, indicating that they have been hit hardest by the effects of the pandemic and lockdown restrictions.
Meanwhile, the research suggests that consumer spending intentions are changing dramatically as the country heads out of lockdown. For the first time, every category has seen an increase in their intention to spend since January, except groceries which remains essentially unchanged. This is in contrast to previous sentiment, following the Brexit referendum and the financial crisis, where consumers expected to spend more on groceries, and occasionally on home improvements and holidays, with everything else net negative.
The biggest increases have been in leisure and fashion. In leisure, the people expecting to spend more outnumber those expecting to spend less by three to one. PwC said that there is clearly a pent-up demand to go out once restrictions allow, with never before seen net spending intentions in leisure of between +25 and+32% compared with between -7 and -16 just two months ago.
For fashion, that ratio is two to one in favour of spending more. Other shopping categories however are more evenly split. Consumers are prepared to spend on ‘fun purchases’ that they haven’t had the chance to over recent months.
With uncertainty remaining over easing of restrictions and the reopening of national borders, holidays have slipped behind restaurants in the top three reopening activities that consumers are most looking forward to.
Lisa Hooker, consumer markets lead at PwC, commented: “After a tough year there is now a real sense of anticipation as consumers eagerly await the re-opening of non-essential retail, hospitality and leisure. Forced savings during lockdown have led to record levels of optimism and a number of ‘firsts’ such as all regions being positive since we started the survey in 2008. Consumers have missed their favourite activities such as shopping, eating out and going on holiday and so there is ample opportunity, over the Spring and into the Summer, for operators to maximise this appetite to spend.
“It is great to see that consumer sentiment among the over 65s is now net positive for the first time in our data reflecting the success of the vaccine programme, giving them a way out of the pandemic and back to normality.
“However, there will remain a level of uncertainty particularly in areas such as travel where the timing of the reopening of national borders is not yet clear and a risk that further waves of the virus could cause restrictions to be tightened once again. Those businesses that are better prepared, through embedding longer-term resilience, capitalising on emerging consumer trends and embracing new business models will fare better in the months ahead.”
NAM Implications:
- Aye, money to spend…
- …but in the hands of super-savvy consumers…?
- …demanding demonstrable value for money.
- Fingers crossed re ‘intent-to-spend’.
- But best keep in mind:
- 1.75m officially unemployed.
- 5m on furlough…
- PS See: Almost 190,000 Retail Jobs Lost Since First Covid Lockdown
