- Nearly half (47%) of UK consumers intend to spend less during this December festive season compared to last year
- Over a third (38%) of UK consumers plan to participate in the next big shopping or sales event, and over a quarter (27%) intend to spend less in the sales compared to 2019
A significant proportion of the UK public will be spending less this Christmas and resisting sales promotions, according to the latest EY Future Consumer Index, which is published as the retail sector gets ready for new COVID-19 restrictions.
The survey of over 1,000* UK consumers found that nearly half (47%) say they intend to spend less during the December festive season than they did last year. This is higher than the Index’s global† average of 43%.
Only 38% of UK consumers are planning to participate in the next big shopping or sales event, and over a quarter (27%) of those that intend to shop in the sales will spend less, which suggests that promotions like Black Friday may see lower levels of consumer activity than in previous years.
Silvia Rindone, EY UK & Ireland Retail Partner, comments: “The UK public appears to be looking towards Christmas with caution, as consumer concern over personal finances continues to affect confidence. Big shopping or sales events, such as Black Friday, have traditionally driven footfall but the new lockdown restrictions mean the excitement of the in-store Black Friday experience will be lost this year.
“Facing the prospect of less consumer activity in the run-up to Christmas, retailers need to review their promotional and marketing strategy and prepare for an unprecedented festive season. Getting online right will be critical, so retailers should focus on maximising online campaigns and capacity. Retailers must fully understand consumer sentiment, and how they’ve made changes to their lives and spending habits as a result of the pandemic. With so many consumers intending to spend less this year, retailers will need to ensure their online operations are effective at capturing remaining demand.”
Spending less, saving more
The Index found that 29% of UK consumers reported that their income has decreased because of the impact of COVID-19. Over half (53%) of UK consumers across all income levels, including 53% of high-income earners and 54% of middle-income earners, say they are thinking more carefully about their spending as a result of the pandemic. Nearly half (49%) of UK consumers across all income levels say they are now trying to save more money than in the past, rising to 55% for high-income earners and 51% for middle-income earners.
Growing pressure on online operations
Even before the latest lockdown measures were announced on 31 October, among the UK consumers who were still planning to participate in big shopping or sales events, more than three-quarters (76%) said they expected to shop mostly online or online-only. A mere 3% said they expected to shop mostly or only in-store.
The online trend is also extending to grocery shopping, with 28% of UK consumers saying they will primarily buy fresh food from online retailers or direct suppliers, rising to 31% for packaged food. This is similar to the proportion of UK consumers who primarily buy their food from high street retail locations (28% for fresh food and 30% for packaged food).
Mona Bitar, EY UK & Ireland Consumer Leader, comments: “Even before the latest lockdown restrictions, most consumers were likely to turn to the convenience and relative safety of online retail for their Christmas shopping. Over a quarter of UK consumers could even be looking to buy online to prepare their Christmas dinners. The proportion of people who now want to buy fresh food online is more than double online sales’ current market share, suggesting that this will be an area of growth for grocery retailers.
“While UK consumer spending may be reduced, remaining demand will be directed online. Retailers could be facing a dramatic increase in online purchasing over the coming weeks and this will pose challenges for capacity and fulfilment for many. They will need to reinforce the technological and fulfilment infrastructure necessary to meet demand. What would have been a 10-year transition has happened in less than a year, and retailers need to act now with agility and focus. Doing so now will not only maximise their chances of thriving during Black Friday and Christmas, but position them for future growth in the long-term.”
For the latest UK insights and information on the EY Future Consumer Index visit: https://www.ey.com/en_uk/consumer-products-retail/why-retailers-must-act-now-to-capture-uk-considered-christmas
Notes to editors:
About the EY Future Consumer Index
†The fifth EY Future Consumer Index is a survey of 14,467 consumers across the UK, US, Canada, Brazil, France, Italy, Germany, Spain, Denmark, Sweden, Finland, Norway, India, UAE, Saudi Arabia, China, Indonesia, Japan, Australia and New Zealand during the week of 29 September through 5 October 2020.
*1,002 respondents live in the UK. The index explores current behaviours, sentiment and intent