New research by Accenture has found that 70% of UK adults are planning to cut back on their festive spending this year due to the rising cost of living.
The survey of over 4,200 consumers showed that despite spending the last two Christmases under social restrictions, 75% said they aren’t planning a big celebration.
Households are looking at several ways to cut back on costs this festive season, most notably on gifting. Top areas where people were looking to cut back were on presents (49%), eating out (46%), general socialising, and food and drink at home (both 35%).
Of those planning to reduce spending this Christmas, 45% stated that they would be buying food from budget-friendly supermarkets. Despite a desire to save costs, though, only 39% are planning to take advantage of discount events more than last year e.g. Black Friday.
Of the small minority (16%) who are planning a big celebration, 38% said they will have to dip into their savings, while 44% will be shopping early or spreading the cost.
Kelly Askew, retail strategy & consulting lead at Accenture, said: “The fact that shoppers are planning to spend less on gifts this year reflects just how low the mood feels in the run-up to this Christmas. As consumers continue to start their shopping earlier each year in a bid to spread the cost, it’s time for retailers to get creative with their marketing and offer ‘solutions’ to their customers rather than just ‘items’. For example, creating cost-effective bundles for festive grocery meals or complete fashion outfits, or offering gift cards with bonuses to incentivise customers while also locking in cash flow.
“Retailers should also look to educate consumers and families, helping them to shop economically and sustainably where possible. Taking clear steps to support people during this difficult time is the right thing to do and will encourage more loyalty among consumers.”
A parallel survey of 150 UK retail executives found that retailers are also wary of declining consumer confidence. Four in five (84%) identified this as a factor in influencing their strategy for the festive season, with over a third (34%) reporting it to be a very significant influencing factor. Other notable factors included rising inflation (94%) and supply chain disruptions (91%).
Askew added: “Retailers spend months prepping for Christmas – and those who prioritised driving internal efficiencies and removing excess cost will have a better chance of protecting their margins and avoid transferring too much cost to the consumer. Ensuring they have a fighting fit workforce for the festive season is key, but beyond Christmas, ongoing focus on driving unnecessary cost out of their business will be crucial to help temper a winter of discontent, and allow them to exit the slowdown stronger.”
NAM Implications:
- Top areas where people were looking to cut back were on:
- Presents (49%)
- Eating out (46%)
- General socialising (35%)
- Food & drink at home (35%)
- Take these ‘as read’ and factor in potential impact on your categories…
- Realists realise that gifting intents are the least of it…
- …in that many people are on the bread line.
- And have other priorities…
- Meanwhile, retailers try to cushion shoppers pricewise.
- At least until Christmas…
