UK households will have £3bn less to spend this Christmas, report finds
To mitigate this, many shoppers intend to start Christmas shopping earlier, use online marketplaces to ‘stretch their budgets’ and cut back on their overall spending
UK households are expected to have £3bn less to spend this Christmas compared with last year, according to new research from ecommerce delivery groups ShipEngine and ShipStation, in partnership with Retail Economics.
It comes as high levels of inflation have “continued to erode spending power for many households as the cost-of-living climate drags on”.
To mitigate this, many shoppers intend to start Christmas shopping earlier, use online marketplaces to “stretch their budgets” and cut back on their overall spending.
The Peak Season Report 2023 found that overall, UK consumers look set to spend £17.9bn on online marketplaces this Black Friday and Christmas as they search for the most competitive prices.
Across the eight markets surveyed (UK, US, Germany, France, Spain, Italy, Canada and Australia), the report predicts that online marketplaces will account for almost £202bn worth of sales over the peak season in total.
As consumers continue to be cautious with spending, 79% of those surveyed said they plan to cut back on non-food spending related to Black Friday and Christmas, up 9% on last year. Specifically, 34% of UK consumers cited inflation and 22% highlighted a lack of savings as their biggest concerns heading into peak season this year.
Despite this, the report found that retailers appear to be more optimistic about prospects for peak demand, with almost two-thirds of online merchants surveyed stating sales volumes will broadly align with last year, while 24% expect volumes to rise on last year.
There was also optimism for online prospects, with 57% of consumers planning to do most, if not all, of their holiday shopping online, up from 49% last year. Looking at the UK market, 64% of consumers plan to do the majority of their shopping online.
The report also found that UK consumers are most likely to start shopping early, with 40% planning to start their Christmas shopping before October. In addition, 15% of those expecting to shop earlier said they already started shopping in August.
In light of this, one in four merchants surveyed intend to increase the number of their holiday promotions this year, with the same proportion planning to launch promotions before October.
Richard Lim, CEO of Retail Economics, said: “The squeeze on incomes has become a war of attrition for many households who have dwindled down their savings as the cost of living crisis drags on. Savvy consumers are using all means necessary to manage their budgets by shifting more of their spending to marketplaces to search for bargains, searching for pre-loved products and starting their festive shopping earlier to spread the cost.
“Retailers will have to work harder than ever this year to keep prices competitive while catering for more demanding customers who want to shop on and off-line in a manner that suits their needs.”
