Almost two-thirds of UK adults will be cutting back their Christmas spending this year due to the cost-of-living crisis. This is according to a new survey of 2000 UK adults, commissioned by the IPA and carried out by Opinium.
The IPA Insight report, Christmas amidst the Crunch 2, reveals that 64% of all UK adults will be cutting back their spending versus last year, due to the ongoing pressures of the cost of living. This figure is particularly pronounced for the younger generations aged 18-24 years old, with 82% planning Christmas cutbacks, and for all adult women at 68% vs all adult men at 60%.
Hospitality sector set to be impacted by consumer cutbacks
The hospitality sector looks set to be particularly impacted by these cutbacks with almost a quarter (24%) of all consumers stating that they will be reducing their spend on meals out and almost a fifth (19%) reducing their visits to bars and clubs. Meanwhile, among other cutbacks, 23% have said they will be reducing their spend on new clothes; 21% will be cutting back on presents for extended family and 20% say they will scale back their spend on Premium Groceries/Drinks (e.g. branded, luxury ranges).
Younger generations to rely on savings and sales for Christmas spending
To fund the Christmas spending that consumers are planning, nearly half (48%) stated that they will be using their savings to finance this, rising to 58% of 18-24s. A further 13% of all adults intend to use credit to pay for Christmas shopping rising to 17% of 35-54s, while 10% will be using ‘Buy now, Pay later’ schemes, rising to almost double that (19%) for 25-34s.
Consumers will also be hunting for bargains with over half of UK adults (51%) intending to spend during Black Friday and a third (33%) looking to spend up to a quarter of their Christmas shopping budget on Black Friday sales. This figure is considerably higher for the 18-24 age-range with 79% of 18-24s intending to shop during Black Friday and 43% intending to spend up to a quarter of their Christmas budgets then. In addition, nearly a quarter of all adults (22%) and 50% of 18-24s are planning on taking part in Boxing Day and January sales.
Second-hand gifting increasingly accepted during cost-of-living crisis
With the cost-of-living crisis continuing, there is an increasing acceptance of second-hand gifting for Christmas this year, according to this latest survey. Two-thirds of all adults (67%) state that they would be happy to receive a second-hand or refurbished gift, with the most popular options being books (34%), jewellery (21%) and clothes (20%).
In addition, roughly half of people would consider giving a second-hand or refurbished gift to an adult (49%) or child (51%). Key considerations when giving second-hand or refurbished gifts are affordability (47%), a greater chance of a bargain (35%), sustainability (33%) and the proceeds going to a good cause (31%).
Opportunities for brands exist
In terms of pointers for brands, Christmas amidst the Crunch 2, reveals that almost a third (31%) of UK adults say they are more likely to do Christmas shopping with brands and retailers that prioritise sustainability rising to 51% amongst those aged 18-34, while half (50%) are open to purchasing Christmas gifts from new and emerging brands. In addition, around a third (31%) are open to using AI for Christmas gifting ideas this year, rising to over half (51%) in the 18-34 age group.
In terms of the communications from brands around Christmas, most consumers want them to be festive (37%), funny (21%), nostalgic (20%) and value-focused (20%). In addition, nearly half (46%) of consumers want to see Christmas advertising that reminds them of better times,
Commenting on the findings
Says Jamie Britton, Senior Insight Manager, IPA: “This survey reveals the true impact that the prolonged cost-of-living crisis, coupled with rising interest rates, is having on consumers’ spending plans. It is particularly significant here given that the Christmas season is known to be the season for giving.”
To navigate this tough environment, brands must pay attention to these consumer intentions and ensure they are gauging and appealing to the mood of the nation in both their advertising and their seasonal offerings.
