After official data released today showed that people held back on their spending in October, research released by Mintel suggests 51% of British consumers will follow a stricter budget this Christmas due to financial concerns.
In the study, 56% of consumers said that news stories about ‘shrinkflation’ mean they will be looking more closely at prices this Christmas. Overall, 28% of consumers expect to pay for more Christmas spending on credit this year, up from 22% in 2022. Meanwhile, with Black Friday approaching, the research reveals that 25% of consumers expect to wait for promotions/discounts before buying festive gifts.
Mintel forecasts retail sales by value in November and December (both for in-store and online food and non-food) to hit £94.5bn. This represents an increase of 3.6% compared to last November and December, when sales reached £91.2bn, but this year’s growth is solely driven by inflation. In addition, total sales by volume are forecast to decline by 2.9% as the market is hit by reduced discretionary spending.
Nick Carroll, Category Director of Mintel Retail Insights, commented: “There’s little doubt that festive 2023 will be a challenging period for retailers, with over half of shoppers looking to cut back. However, there are signs of a well-timed recovery in confidence ahead of the big day. Several weeks ahead of Christmas Day, shoppers may be cautious about their spending intentions but, as history shows, once the festive feeling takes over, some caution is thrown to the wind. This should mean more opportunities for retailers this December compared to last year.
“The recovery in confidence is being driven by higher earners, while lower earners are still facing a further year of financial pressures. This will mean a highly polarised spending period, with value still high on the agenda for many. This environment lends itself well to Black Friday promotions, and the earlier launching of deals and the scale of retailers already engaging in the event mean all signs point to the event being as large as ever.”
He concluded: “Brands and retailers can cut through this festive period by giving some much-needed mood-boosting relief after another difficult year. Tapping into this feeling, the tone taken by most marketing campaigns so far has been more playful. Customers will be looking to keep a lid on spending while having a good time, and this makes it more tempting to splash out on lower-priced pick-me-ups, such as value fashion or premium ready meals. There’s also the chance for grocery retailers to receive a boost from the switch away from out-of-home spending by trying to recreate the benefits of eating and drinking out, from the comfort of people’s homes. For retailers as a whole, there’s everything to play for.”
NAM Implications:
- Another confirmation of New Norm Christmas realities…
- And in these ‘Mintel’ conditions…
- …any real growth will be at the expense of rivals.
- It’s there, but will be a fight…
