Monday, November 29, 2021

UK consumers prepare to spend £21 billion this festive season

One in four consumers in the UK intend to spend more this festive season, with an average £428 spend per person up from £384 last year, according to PwC’s festive predictions research. The increase, which is seen across all age ranges and regions, means a total spend of £21 billion on presents and celebrations, a 12% increase on 2020.

The increased spend is driven in part by more people planning to spend Christmas with extended family, leading to more gifting opportunities, more celebratory food and drink and more Christmas socialising. Meanwhile, recent price inflation means people expect they will need to spend more.

Following an unsurprising but significant shift towards online shopping in the past year, online will be the big winner again this Christmas. Millennials remain the most active online shopping age group and over 55% of consumers in the Midlands also say they plan to buy online. The convenience of click and collect services, as more workers return to the office, has also driven online spend.

Overall two thirds, 67%, of Christmas spending in the UK will be online, edging closer to the 83% online spend over Black Friday, an event that has been predominantly an online phenomenon in the UK in recent years. This shift has been exacerbated by famous high street brands closing high street stores and embracing an online presence.

The first two weeks of December will again be the busiest for Christmas shopping but up to a quarter of Midlands consumers (16% in the East Midlands and 25% in the West Midlands) will have bought most of their presents by the end of November, earlier than we have seen in previous years. Concerns over stock levels, delivery times and further impacts of Covid are forcing consumers to shop earlier than usual to avoid disappointment.

Black Friday

After waning in popularity over the past five years Black Friday is back on this year with an estimated £9 billion to be spent during the shopping event. A quarter of Midlands consumers are definitely going to buy in this year’s Black Friday sales, while the vast majority are interested or may buy, showing a marked resurgence ahead of 2019 levels.

Interestingly, Black Friday sales are not driven by early Christmas shopping with consumers instead buying for themselves, especially men, where 74% will buy for themselves. The majority of shoppers will buy less than a quarter of Christmas presents during Black Friday, with a mere 3% using the event to buy all their gifts.

Sarah Phillips, Midlands Consumer Markets Leader at PwC, said: “Christmas this year may not be completely back to normal but consumers are determined to make it a good one and many are prepared to spend up to 20% more than last year. Spending habits will be more traditional with a focus on food and drink, Christmas dinner and stocking fillers as opposed to homewares and toys. Concerns over stock availability is also driving a desire to shop early this festive period.

“Black Friday is back with a bang and it’s clear that there has been a resurgence in the number of people looking to participate in the event, with men spending more and hoping to grab a bargain.  Retailers will want to take advantage of the renewed interest in the event, but they will look to balance delighting customers with good value, stock availability and profitability ahead of the important Christmas trading period.

“We know consumers are looking to spend significantly online – for both Christmas and Black Friday – so retailers need to think about how they can get the best from that scenario. Early shopping offers retailers the opportunity to reduce delivery costs and pressures, manage demand to reduce the cost of seasonal workers, control pricing to protect margins, and offer certainty of delivery to consumers.”

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