Christmas and the consumer

Great expectations

The Christmas clock is ticking, but will the pendulum swing in retailers’ favour this year? The annual battle for every festive pound spent has well and truly commenced, and tapping into the psyche of the Christmas shopper remains as critical as ever.

So what is the festive spirit among the UK’s shoppers? What do they expect to spend this year? How, when and where will they spend it? How does this vary across the UK? And what are their views on the overall Christmas shopping experience? These are all questions that Retail Week, in conjunction with Microsoft, posed to 1,000 shoppers.

The consumer mood

‘How much are consumers planning to spend?’ is one of the critical questions on every retailer’s mind.

In response to better economic conditions both at home and globally, UK consumer confidence has returned to levels seen before the financial crisis. This bodes well for consumer spend this Christmas.

However, overall spending will be somewhat restricted by muted wage growth across the economy, which continues to squeeze household finances.

 Uncertainties ahead of the 2015 general election, consumer awareness that an interest rate rise is likely next year and renewed weakness across the Eurozone are also factors that will act as a drag on spending this festive season.

According to GfK’s UK Consumer Confidence index published last month, sentiment decreased by 1 point to -2, on the back of a 2-point drop in September.

In terms of overall Christmas-related spend, including presents, food, drink and fashion, almost half of shoppers who participated in this research study say they will spend the same as last year. 29% say they will spend more, while 23% say they will spend less.

Retail Week spoke to shoppers on the high street who share their Christmas spending plans.

 Regional differences in the consumer outlook are indicative of how spending will vary across the country. In London and the Southeast, the number of shoppers predicting they will spend more rises to 33%. This figure drops to 28% when it comes to the whole of the UK. At the same time, fewer consumers in London and the Southeast (22%) say they will spend less compared with the national average.

For the rest of the UK, the consumers saying they will spend less increases to 24%. The often talked about sense of polarisation between London and the Southeast and the rest of the country is in evidence.

Drilling down into category spend, between 80% and 90% of shoppers say they will not spend more than £200 in each category, including food and drink.

In every category, the highest proportion of respondents say they will spend less than £50 – including, perhaps surprisingly, on food. 32% say they will spend less than £50 on food, although only marginally higher than the next bracket, with 32% anticipating they will spend £50 to £100, and nearly a quarter (24%) saying they will spend £100 to £200.

Who will consumers shop with?

Who will get the lion’s share of consumer spend this Christmas? Amazon. The statistics are staggering.

Nearly two in every three people surveyed (63%) cite the online giant among the three retailers they will shop with for presents this Christmas. No other retailer comes close in terms of popularity in this poll, and this is seen across all age groups.

The table shows the top 10 most popular retailers that shoppers plan to buy presents from this Christmas.

Argos has achieved an impressive score, with more than one in three shoppers saying they will buy their presents from the general merchandise retailer.

Argos has always been a go-to household favourite at Christmas and has strengthened its consumer appeal by embracing a multichannel approach in addition to its high street presence, as well as partnering with eBay and a £10m marketing campaign to boot.