‘Cutting back on retail spend top of consumer’s New Year resolutions’

Many retailers will have suffered a slow start to 2024 with UK shoppers cutting back on spending in January. A quarter of consumers stated that they planned to spend less than an average month on retail items in January, and 24 per cent stated that they intended to purchase less “stuff”, according to GlobalData’s January 2024 UK monthly survey.

Tash Van Boxel, Analyst at GlobalData, comments: “After indulging over Christmas, spending is likely to be restricted, with many stretching their incomes to last longer amid the long slog to January payday. While grocers will be more protected from the brunt of consumers cutting back due to the essential nature of their products, this is unlikely to extend to retailers in non-food sectors. Therefore, non-food players must ensure that they offer value for money, and that quality is communicated, while offering tactical discounts and promotions throughout Q1.

Of those stating that they intended to spend less on retail, 43% stated that this was due to spending too much in December 2023. Nearly 50 per cent of respondents stated that this was due to spending on Christmas presents, in addition to personal purchases throughout the final month of last year.

Van Boxel continues: “Christmas spending was prioritised, resulting in strong retailer results over the festive period, such as Primark reporting 4.5 per cent UK growth in the 16 weeks to 6 January 2024. This was supported by consumers turning to Buy Now Pay Later (BNPL) finance options to spread the cost. However, consumers will now begin to pay back their BNPL expenses, in addition to credit card payments from the previous month, resulting in consumers tightening spend.”

While non-essential retail spending is limited during times when consumers are forced to budget more strictly, spending on leisure is also expected to be squeezed as many seek cheaper alternatives. 23 per cent of consumers stated that they planned to spend less than an average month on eating out, and 24 per cent stated that they intended to cook more from scratch.

Van Boxel adds, “While total UK retail spend is forecast to grow 3.0 per cent in 2024, volumes are barely recovering after two years of consecutive declines. Retailers will need to compete with leisure and hospitality operators to entice spending from consumers who are looking to make cutbacks. This provides an opportunity for retailers, specifically grocers, to bolster sales. As consumers avoid eating out, grocers must promote premium ready meals and dine-in options to shoppers looking to indulge while on a budget. Likewise, at-home beauty routines, such as face masks and spa treatments, will enable consumers to pamper themselves without spending on professional services.”