It seems as though Christmas 2022 is about making the right choices. With inflation at 11.1%, a 41-year high, consumers are forced to be thoughtful about how they spend their money. Some opting to spend less this Christmas by simply buying less food, drinks, and presents, while others are escaping on a holiday.
With pent up desire to travel, twice as many people are spending Christmas away from home, on holiday or visiting family abroad, in comparison to pre pandemic years. In London, one in five people are looking to be on holiday for Christmas.
This is great news for the travel industry which has suffered massively from the pandemic blow. However, for retail and hospitality, it means footfall is lower and consumers will be spending more money on their holiday instead of Christmas food and drinks, presents, outfits, and decorations.
According to PWC’s predictions, most people will spend less on everything even if they’re home for Christmas. Shoppers will be keeping a tight grip on their spending this year due to the rise of inflation, cost of living crises, and economic uncertainties.
A recent survey reveals, 88% of consumers are concerned about the cost of living and 20% are lowering their budgets this Christmas; that’s an expected £1.8 billion decline in spending, or about £33 per person. Only 9% of respondents said they’ll spend more this Christmas. Although, every category has a net negative spending intention.
Food and drinks suppliers can usually count on people feasting during Christmas. Luckily, that is still a priority but consumers are being savvy. They are planning to reduce spending by finding good deals, buying cheaper brand alternatives, buying less, and thus wasting less. Supermarkets have seen the average basket size get smaller over the past few months, which is a trend we’ll continue to see during these tough times.
Albeit, Christmas remains a joyful occasion and 31% of consumers have decided to get organised to make their cash go further in order to have a normal Christmas. 26% of consumers are taking advantage of sales and promotions; and 22% are buying now in case prices increase.
Another concern has been delivery disruption with Royal Mail scheduling strike on prime dates such as 14th, 15th, 23rd, and 24th December and other companies experiencing delays. This is another reason consumers had to get organised and make their online orders earlier than in previous years.
The UK consumers are facing the biggest decline in real disposable income since the end of World War II leading them to make tough decisions on how to spend their hard earned money this Christmas.