As the holiday shopping season approaches, UK consumers are displaying a keen eye for bargains, shaping their purchasing behavior, according to the latest EY UK Future Consumer Index. The report highlights that nearly 45% of UK shoppers are gearing up for Black Friday, with 65% intentionally delaying purchases until this event.
Contrary to some predictions of a resurgence in physical shopping, EY emphasizes the critical role of an online presence this year. About 64% of UK consumers plan to search online for deals, marking a significant increase from 41% the previous year. Silvia Rindone, EY UK&I Retail Lead, notes the importance of getting omnichannel strategies right, including features like click & collect and in-store returns, to ensure a successful festive season for retailers.
The study also reveals a cautious spending mindset among UK consumers, with 35% expecting to spend less this festive season compared to previous years. Millennials (26-41 year-olds) are particularly conservative in their spending, with 40% planning to cut back, in contrast to 27% of shoppers over 58.
Rising living costs, especially concerns about energy, water, and heating expenses, contribute to this cautious approach, with 87% expressing worries in this regard. While inflation is moderating, lingering effects from a year of rapid price increases impact consumer sentiment.
Fashion and non-essential retailers may face challenges as consumers tighten discretionary spending, with 51% planning to spend less on big-ticket items and 43% cutting back on clothing and footwear. However, there is a bright spot, with 18% of consumers allocating budget for «luxuries and small indulgences,» signaling the potential influence of the «lipstick effect.»
Silvia Rindone advises retailers to carefully plan promotions, considering the evolving dynamics of consumer spending habits. The report underscores the importance of adapting strategies to capture the attention of both younger and older consumers, recognizing differences in spending appetite influenced by factors like inflation, high rents, and increased mortgages, particularly affecting the younger demographic. Retailers and brands are urged to navigate these nuances in consumer behavior for a successful holiday season.
