According to a report by Retail Economics and Metapack, it is anticipated that shoppers will cut back on spending for non-essential items by over 20% this Christmas. The report reveals that UK consumers are expected to spend £4.4 billion less on non-essential purchases compared to last year, a decline of 22%. This decrease in spending can be attributed to the cost-of-living crisis, which is putting a strain on disposable income.

The impact of this decline in spending will be felt most heavily by clothing and footwear retailers, as 26% of consumers plan to reduce their apparel spending. Additionally, rising energy bills, labor costs, and the increased cost of goods will put pressure on retailers, potentially leading to reduced trading hours. Homewares, electrical goods, and toys will also be affected, as 38% of shoppers identify themselves as “distressed” and at high risk due to the soaring cost of living.

Interestingly, while retailers are optimistic about sales growth during the holiday season, consumers are looking to cut back on their spending. This contradiction between retailer expectations and consumer sentiment presents a challenge that must be navigated carefully in the current economic climate, according to Andrew Norman, General Manager of Metapack.

Furthermore, physical retailers will experience a decline in footfall during the Christmas period. It is projected that 20% fewer shoppers will be out and about in December compared to pre-pandemic levels. Although this year’s footfall is expected to be 4.2% higher than last year when Covid restrictions kept many people away from stores, October and November are anticipated to see a decline of 2.1% and 2.7%, respectively, according to Springboard.

Overall, the report paints a challenging picture for retailers during the Christmas trading period, with decreased consumer spending and lower footfall expected. To mitigate the effects of the cost-of-living crisis and changing consumer behavior, retailers will need to carefully adjust their strategies and navigate this landscape.

Useful links:
1. Retail Economics
2. Metapack