Shoppers predicted to spend £4.4bn less in the run-up to Christmas
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New research has indicated that UK shoppers could spend £4.4bn less on essentials ahead of Christmas – a 22% drop as the rising cost of living impacts on disposable income.
The research by Retail Economics with retail technology firm Metapack, suggests nearly 60% of shoppers expect to cut spending on non-food items in the last three months of the year, the period during which most retailers make the most profit.
The forecast, if correct, would put additional pressure on retailers facing higher energy and labour bills, as well as rising commodity costs.
The company’s 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 concern, as UK inflation runs near 40-year highs at 9.9%.
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This December, shoppers are expected to be nearly one-fifth fewer than before the pandemic, with numbers predicted to rise by just 4.2% from last year, when the Omicron threat kept many at home.
The shift to online shopping is also expected to slow as higher shipping and return costs for returned items lead to higher fees.
Retail Economics chief executive Richard Lim said: “Inflation will peak at just the wrong time for retailers. Buyers’ budgets are already under intense pressure as inflation in international markets hit a ten-year high. Consumers are worried, budgets are under pressure, and households are set to cut spending this year in an attempt to make ends meet.
“Amid weakening consumer demand, retailers are also facing a pincer move as costs and operating costs rise, which are testing business models to the breaking point. With profit margins under intense pressure, some retailers are planning to shift shipping and return costs to areas that encourage consumers to look for alternatives.”