Deal savvy UK consumers give hope to retailers ahead of Christmas after another challenging year

As Black Friday (24th November) approaches, 35% of UK consumers expect to spend less over the upcoming festive season compared to previous years, according to EY research.

The thirteenth edition of its survey of 1,000 shoppers 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 27% of those over the age of 58.

Ongoing concerns about cost-of-living are continuing to shape attitudes, with 87% of respondents worried about energy, water and heating costs.

Financial pressures are particularly acute for younger shoppers (under 41s), with 59% concerned about rising interest rates, compared to a quarter of older shoppers (42 and older).

Shoppers are continuing to cut back on discretionary spend with 51% planning to spend less on big ticket items, 43% cutting back on clothing and footwear, and 42% cutting back on spend on alcohol.

However, there is room in household budgets for small treats, with 18% planning on spending more on luxuries and small indulgences.

Silvia Rindone, EY UK&I Retail Lead, comments: “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 64% of people primarily doing their research online, and only 6% planning on researching in-store.

Deal savvy younger consumers are driving this online trend, with 28% of Millennials planning on ordering more online in the future, compared to 16% this time last year.

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.”