Retailers look set for tough Christmas with new data suggesting consumer confidence is weakening amid concerns about future disposable income.
A consumer sentiment survey carried out by PwC found that only 21% of adults think they will have more disposable income in the coming year, while 28% expect their disposable income to fall – an eight percentage point decline since the same survey in April.
This means the Autumn consumer sentiment level is at its lowest ebb since 2014, and could see retailers and leisure operators impacted by shoppers reducing their festive budgets in the critical run up to Christmas.
Holidays, DIY, Technology and ‘big-ticket’ spending on furniture and home appliances are most in the firing line for consumer cut-backs, with 20% of consumers expecting to spend less in these areas. However, a quarter of respondents (24%) said they will spend more on groceries, while 15% of consumers expect to spend more on holidays.
PwC found that optimism levels among consumers varies significantly by age group. Sentiment has fallen most sharply among those aged 25 and under – down by 25 percentage points compared with April – although they still remain the most positive age bracket overall. In contrast, there has been a slight uptick in sentiment amongst 55-64 year olds since April, even though this age group remains the most pessimistic overall.
Lisa Hooker, consumer markets leader at PwC, said: “Despite the political upheavals affecting the country, consumer sentiment has remained remarkably resilient over the past five years.
“While our survey shows a decline since we last measured sentiment in April, British consumers are still more positive about their personal prospects than immediately after the EU referendum, and significantly more positive than during the last recession and recovery period.
“However, where there has been a drop off in consumer confidence, it is largely concentrated amongst younger people, with a staggering 25 point decline amongst under 25 year olds, at a time of year when we have historically seen a bounce in sentiment in this age group.
“With Autumn sentiment at a five-year low, retailers and operators in the leisure sector may face a challenging run up to the critical festive season, especially for those brands targeting younger consumers.”
