As Black Friday approaches, nearly a third (35%) of UK consumers expect to spend less over the upcoming festive season compared to previous years, according to the latest EY UK Future Consumer Index.
The thirteenth edition of EY’s survey of 1,000 UK consumers found that younger consumers are cutting back on spending much more significantly than older shoppers, with 40% of millennials (26–41-year-olds) planning on spending less this year, compared with a quarter (27%) of shoppers over the age of 58.
Ongoing concerns about cost of living are continuing to shape attitudes, with nearly 9 in 10 consumers (87%) worried about energy, water and heating costs. Financial pressures are particularly acute for younger shoppers (under 41s), with sixty percent (59%) concerned about rising interest rates, compared to a quarter (25%) of older shoppers (42 and older).
Shoppers are continuing to cut back on discretionary spend with over half of consumers (51%) planning to spend less on big ticket items, over forty percent (43%) cutting back on clothing and footwear, and a similar proportion (42%) cutting back on spend on alcohol. However, there is room in household budgets for small treats, with nearly one in 5 shoppers (18%) planning on spending more on luxuries and small indulgences.
Silvia Rindone, EY UK&I Retail Lead, said, “After another challenging year, consumers are starting to show some signs of optimism. Our latest survey shows that consumers are investing more time in looking for value for money and conducting much more research before buying.
“Shoppers are becoming savvier of when to buy, maximising spend during sales events such as Black Friday and Cyber Monday. With the ‘golden shopping quarter’ becoming more polarised around these events, brands and retailers need to carefully plan their promotions this year in order to capture the consumer – too early and shoppers will delay in anticipation of further discounts; too late and the moment will be lost.
“We’re also seeing differences emerge in spending appetite between younger and older consumers. With inflation, high rents and increased mortgages impacting younger age groups, these shoppers are being more cautious with spending. Retailers and brands will need to consider carefully how to win these consumers over.”
While consumers have steadily retuned to the high street this year, deal hunting for the Christmas holiday season is likely to be increasingly online – with nearly two thirds (64%) of consumers primarily doing their research online, and only six percent (6%) planning on researching in store.
Deal savvy younger consumers are driving this online trend, with almost a third (28%) of millennials (41 and younger) planning on ordering more online in the future, compared to 16% this time last year.
Silvia Rindone, comments: “While we’re not likely to see a return of the acceleration of growth in online that we witnessed during the pandemic, it remains a key channel for consumers. Getting omnichannel offers right – like click and collect, or in store returns will be a key driver for retailers having a successful festive season this year.”