Consumer caution will bring ‘low-sales Christmas’

A significant proportion of the UK public will be spending less this Christmas and resisting sales promotions, according to the latest EY figures.

The survey of more than 1,000 UK consumers found that nearly half (47 per cent) said they intend to spend less during the December festive season than they did last year – higher than the index’s global average of 43 per cent.

Only 38 per cent of UK consumers are planning to participate in the next big shopping or sales event, while 27 per cent of those that intend to shop in the sales will spend less, suggesting that promotions like Black Friday may see lower levels of consumer activity than in previous years.

Silvia Rindone, EY’s UK and Ireland retail partner, commented: “The UK public appears to be looking towards Christmas with caution, as consumer concern over personal finances continues to affect confidence.

“Facing the prospect of less consumer activity in the run-up to Christmas, retailers need to review their promotional and marketing strategy and prepare for an unprecedented festive season,” she continued, adding: “Getting online right will be critical, so retailers should focus on maximising online campaigns and capacity.”

The index showed that 29 per cent of UK consumers reported that their income has decreased because of the impact of COVID-19. Over half (53 per cent) of UK consumers across all income levels, including 53 per cent of high-income earners and 54 per cent of middle-income earners, said they were thinking more carefully about their spending as a result of the pandemic.

Nearly half (49 per cent) of UK consumers across all income levels said they were now trying to save more money than in the past.

Even before the latest lockdown measures were announced on 31 October, among the UK consumers who were still planning to participate in big shopping or sales events, 76 per cent said they expected to shop mostly online or online-only. Only three per cent said they expected to shop mostly or only in-store.

The online trend is also extending to grocery shopping, with 28 per cent of UK consumers saying they will primarily buy fresh food from online retailers or direct suppliers, rising to 31 per cent for packaged food.

Mona Bitar, UK and Ireland consumer leader at EY, said: “While UK consumer spending may be reduced, remaining demand will be directed online – retailers could be facing a dramatic increase in online purchasing over the coming weeks and this will pose challenges for capacity and fulfilment for many.

“They will need to reinforce the technological and fulfilment infrastructure necessary to meet demand, what would have been a 10-year transition has happened in less than a year, and retailers need to act now with agility and focus.”

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