UK households to face £3 billion decrease in Christmas spending amid cost-of-living crisis

As the cost-of-living crisis continues to tighten its grip, UK households are expected to have £3 billion less to spend this Christmas compared to the previous year, according to a joint research effort by ShipEngineShipStation, and Retail Economics.

The research reveals that 79% of UK consumers plan to cut back on non-food spending during the upcoming Black Friday and Christmas seasons, marking a 9% increase from the previous year. The primary reasons cited for this cautious approach are the impact of inflation, mentioned by 34% of respondents, and a lack of savings, voiced by 22% of those surveyed.

However, retailers maintain a more optimistic outlook, with nearly two-thirds of online merchants expecting sales volumes to remain steady compared to 2022, while 24% anticipate an increase in sales.

To navigate the challenges presented by the ongoing cost-of-living crisis, consumers are planning to start their Christmas shopping earlier this year. Additionally, they are increasingly turning to online marketplaces to stretch their budgets, with an estimated £17.9 billion set to be spent online during Black Friday and Christmas in search of competitive prices.

UK consumers are leading the trend of early Christmas shopping, with 40% planning to have already commenced their festive buying before October. This early bird approach is driven by the desire to secure discounts and deals and is further accelerated by retailers who plan to initiate promotions earlier than ever.

Marketplaces, in particular, are expected to play a significant role in this year’s holiday shopping season. Nearly 90% of consumers across surveyed markets intend to shop on online marketplaces, with UK consumers leading at 95%. Shoppers appreciate the value and convenience these platforms offer, as they allow easy product and price comparisons. Delivery speed is also a driving factor, with 71% of UK consumers reporting that online marketplaces typically provide fast and reliable delivery services.

The research suggests that consumers’ delivery priorities shift during the peak season. While cost remains important, speed becomes equally crucial, with almost 70% of UK consumers highlighting delivery speed as a top priority. However, less than one-third of merchants plan to offer standard delivery times of two days or less.

Late deliveries are the foremost concern for UK consumers during the peak season, with 42% expressing anxiety about this issue. Additionally, worries about missing and stolen parcels are on the rise, with 41% of UK consumers identifying these as concerns.

When it comes to willingness to pay for delivery, over half of UK consumers are open to paying up to £7 extra for same-day delivery, and 41% are willing to pay the same amount for next-day delivery. Among consumers under 45, the willingness to pay for speedy delivery rises to as high as 78%, underscoring the importance of convenience and speed for this demographic.

Richard Lim, CEO of Retail Economics, emphasised the challenges facing households in the current cost-of-living crisis and the need for retailers to adapt to shifting consumer demands, offering competitive prices and accommodating both online and offline shopping preferences.

In summary, the UK’s festive season is expected to be marked by cautious spending, early shopping, and a strong reliance on online marketplaces, with consumers increasingly prioritising delivery speed to ensure a seamless shopping experience.

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