New data suggests consumer confidence stabilised in March following a record low in February, with younger Gen Z shoppers expected to spend more in the months ahead.
Research by the British Retail Consortium (BRC) and Opinium found that expectations around personal spending on retail over the next three months rose from -5 to 0, while expectations around personal spending overall climbed from +4 in February to +11 in March.
Consumer expectations for the broader economy over the next three months improved from -37 to -35, although the personal savings measure fell from -3 to -5.
Helen Dickinson, Chief Executive of the BRC, noted that spending expectations for DIY and home improvements had moved into positive territory for the first time. She also highlighted Gen Z consumers were expected to spend more than the previous three months across all categories, while Gen X planned the biggest spending cuts for most items, excluding food.
Food and grocery spending expectations continued to outperform other categories and hit a new high, although it was suggested that this could be due to the expectation of rising prices.
Dickinson concluded: “The Spring statement is an opportunity for government to inject some confidence back into the economy. In a matter of weeks, retailers grapple with the reality of billions in extra costs from the increases to employer National Insurance and the National Living Wage.
“This £5bn in new costs will give many no option but to push prices up. Food inflation is likely to hit 5% by the end of the year, and with further costs from the new packaging tax and implementation of the Employment Rights Bill, prices risk being pushed up further. Without a much-needed confidence boost from government, the scale of new costs will see retail investment fall further, holding back future growth in the economy.”
NAM Implications:
- “Spring statement is an opportunity for government to inject some confidence back into the economy”
- (with last Autumn tax increases yet to kick in, driving food inflation to 5%)
- …and the government focused on external matters…
- …prolonged breath holding not advised.
- But opportunities for those businesses that are not prepared to ‘wait & see’….
