With the High Street less than rosy with footfall declining and long-term sales in decline, the UK consumer has over recent years left their Christmas shopping to the 11th hour in a bid to bag a bargain as retailers out play one another with aggressive pricing strategies. But according to consumer analytics company Foresight Factory, this race to the bottom is counter-productive for retailers as UK consumers are savvy and know price cuts are coming so are now holding out for an even better deal.
Against this background are the broader macro-economic pressures facing consumers as we move through the Golden Quarter. GfK’s long running Consumer Confidence Index fell by two points to -12 in November 2017, continuing the broad direction of decline since September 2016. This reflects the erosion of British consumers’ purchasing power as above-target inflation continues its outpace wage growth; despite the latter starting to show promise.
According to Foresight Factory’s own consumer data and advanced analysis, UK consumers have been showing a number of distinct behavioural trends dating back to the same time last year. This includes early bargain hunting – focused on Black Friday. Foresight Factory research indicates that in 2016 some 27% of consumers participated. However, Christmas spending rears its head even earlier: almost one in five consumers had already purchased a Christmas gift in early May, while 29% had by early October.
Consumers are also demonstrating a new trend – that of the highly personalised present suited for their individual needs – sizeable portions of millennials preferring to receive gift cards rather than presents (35%) and sending people links to their preferred presents (16%).
Christophe Jouan, CEO & Co-Owner at Foresight Factory, stated: “The continued decline of consumer purchasing power alongside the precarious political context of Brexit has unsurprisingly hit consumers’ confidence, and this is expected to impact and materially alter the way people approach the Golden Quarter. Last year, we saw consumers attempt a variety of tactics so that they could celebrate Christmas while getting the best bang for their buck, and these will likely be magnified this year.
“This raises a series of challengers for Britain’s retailers, marketers, and consumer-facing businesses in general. They have to maintain a delicate balance, signaling that consumers can trust them with their gift-giving budgets while also appealing to them to spend more that would appear necessary at any other time of year,” he said.
Christophe concluded: “Beyond this messaging balance, there is also the challenge of accommodating these adjusted spending habits – whether that is offering novel forms of gift cards or looking to tap into Christmas spending earlier into the year. The festive period has always been a huge opportunity for businesses, but economically difficult periods mean they have to adjust their approach to adapt to consumers’ less confident mindset. Those who win this year will tread the careful line between encouraging spending and demonstrating an empathetic understanding of the precarious context in which people operate.”