UK | In the lead-up to Christmas, Mintel's latest research has shown that among Brits, 74 percent believe that a happy Christmas can't be bought with money. Financial prudence is on the agenda for 51 percent of consumers who plan to adhere to a stricter budget this festive season.
Concerns about the cost of living, prominently featured this year, prompt 56 percent of consumers to scrutinise prices, citing 'shrinkflation' as a critical factor. A cautious 28 percent plan to leverage credit for Christmas spending, reflecting a notable increase from 22 percent in 2022. As Black Friday approaches, 25 percent of Brits anticipate waiting for promotions and discounts before making festive purchases.
Mintel forecasts a 3.6 percent increase in retail sales by value in November and December, reaching £94.5 billion. However, this growth is primarily driven by inflation, as total sales by volume are projected to decline by 2.9 percent due to reduced discretionary spending.
Nick Carroll, Category Director of Mintel Retail Insights, said retailers had challenges ahead but noted signs of a well-timed recovery in confidence leading up to Christmas. While caution may prevail in spending intentions, historical trends suggest a more open-handed approach as the festive spirit takes hold, presenting opportunities for retailers compared to the previous year.
Carroll said there would be a polarised spending period, with higher earners contributing to the recovery in confidence. This environment, characterised by cautious spending and a desire for value, aligns well with Black Friday promotions. Brands and retailers can capitalise on the festive mood by offering mood-boosting relief in marketing campaigns, adopting a more playful tone.
With consumers aiming to control spending while seeking enjoyment, there's potential for increased investment in lower-priced indulgences like value fashion or premium ready meals. Grocery retailers also benefit from the shift away from out-of-home spending, with opportunities to recreate the dining-out experience at home.
In conclusion, the festive season presents a competitive landscape, and retailers have everything to play for by understanding and aligning with consumer sentiments during this challenging yet potentially rewarding period.