Cost of living: Christmas shoppers expected to spend £4.4bn less this year
UK consumers are expected to rein in their spending as household budgets tighten amid the cost of living crisis.
The move could see shoppers reduce their non-essential Christmas and Black Friday spending by £4.4bn ($5bn) this year, new research from e-commerce delivery technology Metapack and Retail Economics suggests.
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The Holiday Shopping Trends Report found that British consumers are expected to cut back the most, with over 70% of customers expecting to reduce spending in some form.
Most consumers cited rising prices as a major concerns, as UK inflation runs near 40-year highs at 9.9%.
The report identified four key emerging shopper types as the 'golden quarter' nears for the retail industry.
These were categorised as: the undeterred; stretched spenders; secured but concerned; and distressed spenders.
In the UK, it highlights that 38% of consumers identify as 'distressed' – these are shoppers who are at a high risk from rising living costs and most likely to cut back on spending.
A further 38% of consumers identified as 'secured but concerned', these are shoppers who are financially strong, but their attitudes towards holiday spending are being influenced by cost of living concerns.
"Inflation is set to peak at exactly the wrong time for retailers. Shopper’s budgets are already under intense pressure with inflation reaching decade-highs across international market," Richard Lim, CEO of Retail Economics said. "Consumers are concerned, budgets are under pressure, and households are intending to cut back this year as they struggle to make ends meet."
Across the eight markets surveyed (UK, US, Germany, France, Spain, Italy, Canada and Australia), the report notes that over £36bn less is forecast to be spent in the key shopping season on non-food items compared to last year.
Read more: UK consumer confidence hits record low as cost of living bites
"Our research highlights that retailers are forecasting growth this peak season, while consumers are looking to reduce their spending," Andrew Norman, general manager of Metapack said. "There is a gulf that needs to be addressed between retailer expectations and consumer sentiment, and one that will need to be navigated carefully through this current economic climate."
Separate analysis shows UK consumer confidence slumped to a record low in September amid deep concerns about personal finances and the economy over next 12 months.
According to the GfK's consumer confidence barometer, the index decreased by five points this month to -49, the worst overall score since records began in 1974.
The reading marked the fourth new low out of the last five months, with all measures once again severely depressed.
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