Christmas spending plans emphasise squeeze on retailers during most important quarter, as consumers look to capitalise on Black Friday deals

Research commissioned by AI and analytics leader, SAS, into the Christmas spending plans of 3,000 consumers across the UK and Ireland, has revealed the full extent of the challenge retailers face this winter;

• 67 per cent blame rising energy costs on why they have to cut spending this Christmas.
• Consumers plan to spend more of their December pay packet on energy (19 per cent) this December than gifts (17 per cent).
• 57 per cent plan to take advantage of ‘buy-now-pay-later' purchase options to help spread the cost of Christmas this year.
• 49 per cent are more likely to seek Black Friday deals and 31 per cent Cyber Monday deals this year than before.

The research comes after the Bank of England's announcement that the UK could be facing its longest ever recession. Inflation is at a 41-year high and UK retailers are bracing themselves for a difficult Q4, the quarter they typically receive most of their annual revenue.

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.

When asked what their December pay packet would be spent on, consumers anticipate that 19 per cent will be spent on energy and just 17 per cent on gifts.

With 9 in 10 of those surveyed planning to spend less this year on presents - and 39 per cent saying they will spend a lot less - it’s unsurprising that 49 per cent will be looking for more Black Friday (and 31 per cent Cyber Monday) deals this year than before.

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 go off 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 year.

"The good news is our research shows ‘when’ consumers are planning to do their Christmas shopping. Almost 60 per cent of people are aiming to do their shopping in November, while 49 per cent will be looking for more Black Friday deals. Only a small number of consumers plan to leave it until the last minute.

"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."

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.