Consumers plan to spend more of their December pay on Energy than Gifts this Christmas

Research commissioned by AI and analytics leader, SAS, into the Christmas spending plans of 3,000 consumers across the UK and Ireland, has revealed that people expect to spend more of their December wages on energy bills than gifts.

The survey found that British and Irish consumers anticipate they will spend 19 per cent of December pay on energy bills and just 17 per cent on gifts. You can find out more about spending and consumer behaviour over the Christmas period in the report, Christmas yet to come: How retail analytics can drive sales and brand loyalty.

The outlook on Christmas spending is against a backdrop of the cost-of-living crisis, with 67 per cent of consumers blaming rising energy costs on why they have to cut spending this Christmas. Interest rates (58 per cent), car fuel prices (45 per cent) and no savings to call upon (40 per cent) are also high on the list of factors affecting consumer spending.

With 9 in 10 of those surveyed planning to spend less this year on presents for friends and family, just over half (52 per cent) said they will achieve this by cutting back on the number of people they buy presents for. While 48 per cent say they will spend less on Christmas decorations and 36 per cent will spend less on Christmas Cards.

It paints a challenging picture for UK and Irish retailers, who are expecting their Q4 performance to be down on previous years - the quarter they typically receive most of their annual revenue. On top of the cost of living crisis, the UK has entered what is anticipated to be the longest recession in generations.

Andrew Fowkes, Global Retail Practice, SAS, says the outlook isn't completely bleak for retailers, but in a time of unpredictable consumer behaviour, retailers are going to have to use what data and analytical insights they can uncover in order to maximise revenue.

"Right now, retailers are facing the most unpredictable winter for consumer spending.

"There is no base data for them to work from to understand what lies ahead as we have jumped from Covid to the cost-of-living crisis and any data that came before isn't going to be much of an indicator as to the impacts on consumer spending this winter.

“It’s clear consumers will be cutting back this Christmas, and likely even more so into the New Year. Retailers are going to have to pay even closer attention to what the data is telling them about demand signals, to make the best decisions on pricing, what products to push and when. Demand sensing is going to be a retailers' best weapon in maximising sales and revenue this winter and likely for most of 2023 as the recession is expected to last the year.”

Find out more by reading the report Christmas yet to come: How retail analytics can drive sales and brand loyalty.

Methodology
SAS, the leader in analytics and AI, commissioned the research of consumer spending habits and plans in the lead up to this Christmas, with 3,000 people in the UK & Ireland taking part in the survey. The full dataset is attached.

Please credit the research to SAS.