BY JOHN ELLIS, FINANCIAL ADVISOR
Black Friday and CyberMonday are here, and with the Christmas lights appearing in our streets and shops retailers begin to entice us into the Christmas spirit early, yet consumers say they are tightening their belts, with almost two in three planning to cut their Christmas spending this year.
This “Bah humbug news comes from a recent survey by KPMG of over 1,000 participants conducted in October, highlighting the challenges posed by the ongoing cost-of-living crisis.’The survey reveals that a staggering 70% of those surveyed anticipate a rise in prices for Christmas shopping items, adding to their financial strain.
For 62% of consumers, these increased costs are expected to contribute to a more stressful Christmas. Notably, 68% of respondents prioritise price as the decisive factor in choosing where to shop, underscoring the significance of budget considerations in the current economic climate.
The way we give is expected to be impacted, with 63% of consumers opting for smaller presents. And cash and vouchers will be given instead of the usual traditional gifts. This ‘thrift’ is extending to all our holiday spending, as 58% of consumers plan to reduce their overall Christmas shopping spend with fashion accessories (61%), toys and gadgets (51%), and clothing and footwear (44%) among the product categories consumers plan to spend less on
Despite the economic challenges reported, online shopping remains a key strategy for saving money as nearly half of all adults (46%) surveyed planned to actively seek online deals on the Black Friday and Cyber Monday, highlighting the importance of these shopping events for both retailers and consumers.
But its not all bad news for local retailers as six in 10 shoppers plan to support local and Irish businesses, with 68% intending to prioritise Irish food purchases. Vouchers (60%), chocolates (50%), beauty products (45%), books (44%), and jewellery (38%) are the top five gifts on consumers’ shopping lists. Some, 28% of consumers are contemplating forgoing traditional gifts in favour of charitable donations, while 38% plan to gift ‘experiences’ instead of physical presents
The average Christmas food shopping spend is estimated at €254.70, while the average gift shopping spend will be €407.40. The report suggests that shopping behaviours have remained relatively consistent since the lifting of Covid-19 regulations in early 2022, with groceries remaining the least likely category to be purchased online.
Restaurants and pubs are going to feel the pinch, as 6 in 10 consumers say they will cut back on spending compared to the previous year.
KPMG’s Head of Retail, Keith Watt notes: “The long-term impact of the cost-of-living crisis has diminished consumer purchasing power, but it appears Irish shoppers are still planning to spend more at Christmas by sacrificing other things.”
This is confirmed by research from retail chain Penneys, indicating that shoppers will spend an average of €582 on presents this Christmas. The study, conducted by RED C with a nationally representative sample of 1,002 adults, shows that one in three consumers are more likely to do their Christmas shopping in-store this year.
The Ernst and Young Future Consumer Index also conducted a recent survey of over 22,000 consumers across 28 countries, revealing a global trend towards more deliberate and sustainable consumption. Cost of living (94%) and climate change (89%) top the list of concerns influencing consumer behaviour. More than half of consumers (54%) plan to buy less in the future, driven by motivations such as saving money (73%), not feeling the need for new items (49%), and environmental consciousness (39%).
Sustainability is also on the radar, with a third of consumers considering more eco-friendly gift options, and 20% contemplating gifting pre-owned items.
Yet. despite the economic challenges and shifting consumer behaviours, retailers like Penneys note a 33% increase in sales of Christmas items, indicating that festive spirit and spending endure, albeit with a more discerning and budget-conscious approach.
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