The latest Deloitte research reveals consumers plan to spend more this festive season compared to last year.
Key Findings:
Shoppers are looking to prioritise savings for Christmas spending;
One in three also buying presents in November to take advantage of promotion events including Black Friday and Cyber Monday;
Consumer confidence, which improved for a fourth-consecutive quarter, at its highest level since Q4 2021.
More UK consumers are planning to increase their Christmas spending this year compared to last year, signalling a competitive festive season for retailers, according to research by Deloitte.
Deloitte’s Consumer Tracker report surveyed more than 3,100 UK consumers about their spending intentions in the final three months of 2023 – the retail sector’s ‘Golden Quarter.’ There was a seven percentage point increase in consumers (from 19% in 2022 to 26% in 2023) who intend to spend more during the festive period this year, partly as a result of prioritising any savings they’ve made for their Christmas expenditure. However, expectations will be tempered as a significant proportion of customers still say they will spend less (down from 39% in 2022 to 29% to 2023).
Many consumers are looking to spread their expenses across the quarter, with one in three (32%) saying they will purchase the majority of their gifts in November, making the most of promotional events including Black Friday and Cyber Monday.
More respondents this year also said they plan to buy their presents in-store (50%) when compared to those surveyed last year (47%).
Oliver Vernon-Harcourt, head of retail at Deloitte, said: “The long-term impact of the cost-of-living crisis has supressed consumer spending power, but it appears as if consumers are still willing to spend more at Christmas by prioritising it over other spending."
“The Black Friday and Cyber Monday weekend promotions are critical for retailers, and we expect overall spending to increase again this year as consumers try make the most of the available sales on offer. For retailers, product, price and availability, combined with great in-store customer service, will be key to secure their share of the market during the festive period.”
Vernon-Harcourt added: “With more consumers planning to increase their budgets for Christmas, discounters and supermarkets might be the winners during this highly competitive period. However, high street shops will need to work even harder to attract customers to compete with online rivals."
“Some shoppers will remain cautious with their spending during the upcoming winter months because of high energy and fuel prices. Those consumer businesses that focus on creating a good customer experience, through engaging promotions and convenient offerings, such as click and collect and extending store hours, will help attract thrifty shoppers.”
Consumer Optimism At Its Highest Since Q4 2021
The research which comes from the Deloitte Consumer Tracker, one of the biggest quarterly surveys of its kind, captures consumers’ views on their finances, spending habits and the economy.
It found that UK consumer confidence in Q3 2023 improved for a fourth-consecutive quarter, increasing by two percentage points to its highest level since Q4 2021. The sustained improvement means the confidence levels are moving closer to its long-term average indicating that pressures on consumers are easing.
Céline Fenech, consumer insight lead at Deloitte said: “Four consecutive quarters of growth in consumer confidence provide further evidence of the UK consumer’s ability to adapt to challenging economic circumstances. Wages have been growing faster than prices for several months, helping to bolster household finances from the impact of higher interest rates."
“Consumers have also shown a degree of resilience throughout the cost-of-living crisis, adopting recessionary behaviours, such as buying supermarket own-brand goods, to maintain their standard of living and cope with unexpected price rises in the cost of energy, housing and food.”
