Early Christmas purchases surge among UK millennials & Gen Z shoppers

Overall, the average spend this Christmas remains flat as cost-conscious consumers plan to spend on average £467 when compared to £463 last year. However, when factoring inflation at 6.7 per cent consumers will have less to spend this year, so ‘real’ budgets’ will sit at £438, according to a survey conducted by RSM UK.  

Over a third of Gen Z at 36 per cent and millennials at 31 per cent will use some form of credit (credit cards, buy now, pay later arrangements, overdraft and taking out a loan) to fund their Christmas spending. Whilst this shows younger consumers aren’t being put off by high interest rates, it also suggests some are having to resort to borrowing as their finances continue to be stretched.

“Savvy shoppers, particularly younger consumers, plan to hit the high street early to bag a bargain – spreading, and reducing, the cost of Christmas, whilst avoiding any potential delivery and stock issues that we saw last year,” said Jacqui Baker, head of retail at RSM UK.

The biggest cutbacks in Christmas spending will be on categories including clothing at 42 per cent.

When asked about their finances, 52 per cent of respondents said they felt comfortable financially, an improvement from 47 per cent last year. But 17 per cent of consumers are not comfortable financially, down slightly from 20 per cent last year.

“Despite sentiment improving slightly, consumers are still having to make considered purchases, whilst cutting back in other areas. Unfortunately for homeware and clothing retailers, it looks like they’ll be taking the biggest hit. Sales figures in these two categories have already been subdued over the past few months, meaning retailers will have to work hard to shift seasonal stock early in the Golden Quarter,” added Baker.

Robyn Duffy, consumer markets senior analyst at RSM UK, said: “Prospects for this year’s Golden Quarter are in the balance with inflation squeezing spending and a sharp fall in consumer confidence in October. This will put greater onus on sales events such as Black Friday and Cyber Monday this year as consumers look to make their budgets’ stretch further.

“The name of the game for retailers this Christmas is going to be pulling back lost margins, so some consumers might be disappointed by promotional activity this year as retailers keep sales events short and sharp to maximise full price sales through this critical trading period.”

ALCHEMPro News Desk (NB)