UK consumers’ confidence in their ability to weather the uncertainty around Brexit continues to slide as we approach the most crucial shopping period of the year, according to the latest Retail Pulse UK Survey carried out by CONTEXT. Across a range of criteria, the Great British public are shying away from spending. On top of this, UK retailers are getting ready to raise prices early next year as the pound continues to perform poorly. This means consumers have a choice to make; buy now – even though they’re unsure about their finances – or delay purchases and pay more later.
The CONTEXT Retail Pulse Survey is published quarterly, and examines consumer sentiment towards the UK economy and personal finances. The report for Q2 2016 showed that people 65 years and above were very bullish on Brexit—indeed, many of those surveyed likely favoured withdrawal from the EU. But just five months later, confidence in the future prospects of the economy from this age group has fallen significantly. While 42 per cent of UK 65+’s expected positive economic performance in July 2016, feelings have swung massively in the opposite direction with 44 per cent now believing the economy will get worse.
Anxiety about the economy is also creeping into everyday purchasing decisions by all age groups. Consumers in the UK are now two times less likely to invest in electrical products—including smartphones, TVs, and notebooks— than they were in July. This is due to increased worries about the state of personal finances, with one third of all those questioned agreeing they will cut back on electrical purchases due to just this one factor alone.
The CONTEXT Retail Pulse Survey reveals the current trepidation felt in the UK. With the European Commission slashing its growth forecast for the UK for 2017, many expect inflation to rise. Factor in a weak pound, and an uncertain jobs market, it’s no surprise to see UK consumers thinking of cutting back their spending on consumer technology.
Taken as a whole, the Survey suggests a potential negative impact on retailers this holiday season, with Black Friday almost upon them. There is – however – a bright spot: stores looking to make a success of the imported American event and the run-up to Christmas should look to young professionals aged 25-34. According to the CONTEXT Survey, 22 per cent of this age group think their personal finances will improve—the most positive sentiment of any age group—and 19 per cent say they will spend more on electricals in the next quarter.
There are also other indicators in the CONTEXT Survey that suggest UK consumers may be willing to spend, despite their uncertainty. Household saving now stands at 5.1 per cent, a return to the low levels last seen just before the global financial crisis. Unsecured borrowing is also rising, reaching a 10.3 per cent year-on-year increase. This could indicate a more carefree attitude to spending amongst younger demographics. Those savvy enough to see price rises coming could increase the overall spending and make this holiday season a success for the industry.