by British shoppers are expected to spend £4.4 billion less on non-essential items – down 22% – in the run-up to Christmas as rising living costs squeeze their cash reserves.
Nearly 60% of shoppers expect to cut back on non-food spending in the so-called “golden quarter,” or the last three months of the year when most retailers make the most of their profits, according to Retail Economics research with retail technology firm . Metapack.
The outlook piles further pressure on businesses already facing higher energy bills and labor costs, as well as rising commodity costs, forcing many to cut trading hours.
Richard Lim, chief executive of Retail Economics, said: “Inflation is set to peak at exactly the wrong time for retailers. Buyers’ budgets are already under severe pressure with inflation reaching decade highs in international markets. Consumers are worried, budgets are under pressure and households are planning to cut back this year as they struggle to make ends meet.
“Amid this weak consumer environment, retailers are also facing a headwind of rising inputs and operating costs that is testing business models to the breaking point. With profit margins under intense pressure, some retailers are planning to pass on costs through delivery and returns options, precisely in the areas that encourage consumers to seek alternatives.”
Clothing and footwear retailers, which enjoyed a summer boom thanks to the return of socializing and large events such as weddings, appear to have been hardest hit, with just over a quarter of consumers looking to cut back on sales the sector.
High street bellwether Next has already cut its Christmas sales and profit expectations ahead of an expected recession, as it warned of tough times continuing into next year.
About a fifth of shoppers expect to cut back on electronics, toys and homewares, which have seen strong sales during the pandemic lockdown, as 38% of shoppers identified themselves as “distressed” and at high risk from the rising cost of living and a similar percentage said they were “safe but worried”.
While the move to online shopping is expected to slow as higher costs associated with the delivery and return of returned items drive up charges, high streets and other shopping destinations across the country will also feel pressured.
Almost a fifth fewer shoppers are expected to be out and about in December this year than before the pandemic, with numbers expected to be only 4.2% higher than last year, when the Omicron threat took hold many at home. October and November are expected to be even worse than last year with numbers down 2.1% and 2.7%, according to Springboard.
Diane Wehrle, chief information officer at Springboard, said she had expected a more severe drop in visitor numbers to retail destinations due to “consumer fears about the impact of rising energy costs expected in October on their household budgets”.
Supermarkets have already seen shoppers cutting back on their weekly spending, ditching the little extras and turning to cheaper own-label items or discounters such as Aldi or Lidl.
