The scale of Christmas spending cutbacks due to the cost of living is highlighted in new research from KPMG UK – which shows consumer intention to cut back on buying gifts, groceries and socialising.
Over 2600 UK consumers were surveyed for KPMG – with the largest percentage (45%) saying that their gift buying budget would be the same as last Christmas. But nearly four in ten (39%) of those polled said that the cost of living meant that they would have a smaller budget to buy gifts this year.
Those saying they will have to cut back their gift budget were most commonly aged 35-44. People aged 65 and over were least likely to say that they had to reduce their gift buying budget. Only 4% of all the consumers surveyed said they would have more to spend on gifts this Christmas.
Spending plans for festive groceries also told a similar story – with the largest amount of consumers (53%) saying their spend will remain the same as last year. But a third (34%) said they will spend less this Christmas. Only 7% said they would spend more.
A third of consumers (35%) also said that they will be eating and drinking out less this Christmas – broadly the same amount as those who said they will do the same as last year (36%). Only 3% said they would be eating and drinking out more.
Consumers saying they will be cutting back on groceries, and eating and drinking out, were most commonly aged 35 to 44.
Responding to the findings, Linda Ellett, UK Head of Consumer Markets, Retail and Leisure for KPMG, said:
“Unsurprisingly, the higher cost of living looks set to take its toll on Christmas spending for many households. Four in ten consumers told us that their gift buying budget will fall this year, whilst a third said they will spend less on festive groceries and do less eating and drinking out.
“The largest percentages of people said that their spending will remain the same this year, but only small amounts of households said that they were in the position to spend more this Christmas. Even for those spending the same – the volumes that they receive may well be less due to inflation.
“The upshot of this for retailers is continued competition for shrinking consumer spend and reduced volume and a need to capture audiences via strong campaigns, well targeted promotions and discounting and great customer experience. Older consumers told us that they were least likely to have to cut their gift buying budgets – so focus on that group and the presents for kids and grandchildren may be key. Retailers will of course also know that getting people of all ages spending early on Christmas gifts can often mean they end up spending more overall due to the likes of late impulse purchases.”
KPMG’s Consumer Pulse research (released at the end of September) showed that 39% of consumers say they are buying more promotional or discount items in 2023. And a third of consumers (29%) said that they have switched to shopping at less expensive retailers.
