Festive trading looks set to remain under pressure as shoppers prioritise saving over seasonal spend, according to new consumer research from RSM UK.
The professional services firm’s latest Consumer Outlook survey suggests Christmas sales may be more muted than hoped, with just 8 per cent of consumers saying they would spend a £5,000 windfall on festive gifts. Instead, almost six in 10 would either save the money (38%) or use it to pay down existing debt (19%), highlighting the continued squeeze on discretionary spending during the peak trading period.
The cautious mood is expected to persist beyond Christmas. More than half of consumers (57%) plan to save more or continue saving at their usual rate over the next three months, while over a third (37%) say they will spend less as a result of the recent budget.
Nearly half (46%) are concerned about job security over the next six months, further dampening confidence.
Areas most likely to see cutbacks include eating and drinking out (33%), takeaways (27%) and clothing (25%). For convenience retailers, this may translate into shoppers focusing on essentials and value-led purchases rather than trading up during the Christmas period.
Jacqui Baker, head of consumer markets at RSM UK, said caution is now firmly shaping consumer behaviour at what should be the busiest time of year. “The Golden Quarter had already been lacklustre so far, as consumers deferred spending in the lead up to the budget due to constant speculation and uncertainty,” she said. “Now we’re likely to see the final month of this crucial period for the sector impacted, along with a slow start to next year.”
Baker added that the budget had done little to lift consumer confidence, with households choosing to save or reduce liabilities rather than spend. “This is the latest blow to the retail and hospitality industries during their biggest trading period of the year,” she said, warning that the outlook for consumer spending “continues to be far from rosy”.
The findings are based on RSM UK’s quarterly Consumer Outlook survey of 2,000 consumers.