Christmas is usually a high spend time of year for shoppers across the country, but this year is set to look a bit different. Everyone continues to feel the effects of the cost-of-living crisis and price increases in the majority of essential sectors like energy and food, which is likely to shift their priorities and make them much more careful with their spending as we head into the Christmas period.
Recent research from EY has been very revealing in terms of Christmas consumer trends in 2022 and what businesses can expect from their customers and their buying habits. The research, which involved a survey of over 1,000 UK consumers between the end of September and mid-October, unsurprisingly found that decreased consumer confidence as a result of the cost-of-living crisis will have an effect on various Christmas spending habits. This means that spending on presents will be much lower with 43% of consumers intending to cut back on gifts for friends and 34% planning on lowering how much they spend on presents for family.
EY also noted that 67% (almost 7 in 10) of customers are now “extremely concerned” about the increased cost of living and they are more likely to look for bargains in-store this year, which might mean some slight changes to eCommerce trends compared to what we have seen over the past few years. Although online shopping still remains important to many people with 41% of shoppers planning on doing the majority of their shopping online this year.
Low consumer confidence
The survey shows consumer confidence being at an all-time low with only 25% of people saying they feel confident about the future. In addition, 69% of consumers said that they didn’t expect the economy to recover in the next 12 months and 43% think they will be financially worse off in 12 months. This could be very illuminating for businesses and the challenges they might face with extremely cautious consumers heading into 2023. Businesses need to be at the very top of their game to convince shoppers to spend with them.
Another key finding from the study is the widening gap between cash-strapped consumers that are counting every penny and those who are able and willing to spend if retailers entice them to do so. This is having a serious impact on low-income consumers, with 51% seeing themselves being financially worse off next year, compared to only 14% of high-income consumers.
Retailers and brands should be more aware of the price sensitivity of their customers and react accordingly if they want to win spending during the festive season as consumers are making big cuts to their spending. Businesses will need to navigate this by catering to financially resilient consumers with higher incomes and appealing to mid and low-income consumers that are focused on value and prices that reflects their budgets.
Consumers changing shopping habits in response to the cost-of-living crisis
Shoppers are coping with price increases in a range of ways such as reducing spending on everything across all categories and shifting more towards own-brand alternatives, and 47% stated that they will spend less money on clothing. Also, responsible consumerism remains an important consideration for shoppers, with 79% saying they don’t feel like they need to stay up to date with the latest fashion trends and 68% preferring to repair than replace. The move towards more considered shopping behaviour will have noticeable implications for retailers as consumers prioritise durability and quality in what they buy and getting the most value for money.
How we can help businesses
As we can see from this research, consumers are becoming much more careful with their money this festive season, so businesses will need to do everything they can to win custom. This is where using a digital marketing agency like Deliver can help as our team has the knowledge, skills, and experience to make your website your best salesperson and ensure your marketing is generating you leads long term.
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