Shoppers are feeling more secure about their jobs and personal finances over the last three months but their levels of expendable money seem to be drying up, according to a new report today.
Research from the British Retail Consortium (BRC) shows that 32 per cent of consumers in the UK had no spare cash left once bills and essentials had been paid during the second quarter of 2011.
Consumer confidence rose five points compared to Q1 but in worrying news for retailers 71 per cent of respondents to the BRC’s survey claimed they have changed their shopping habits to save money during the period and 65 per cent have switched to cheaper grocery brands.
BRC Director General Stephen Robertson said: “The squeeze on disposable incomes is getting tighter.
“A third of people said they have no spare cash – a new record high. Weakness in the economy and rising utility, fuel and food bills top consumers’ concerns for the next six months.
“Even after paying out for essentials, households that do have spare cash are choosing to pay off debts and build-up savings rather than spend on the high street.”
Retail sales were reported to have risen by 0.6 per cent like-for-like in July but big-ticket related trading continued to be weak during the month with homewares retailer particularly struggling.
Although the percentage of people optimistic about their the state of their finances improved six points to 35 per cent, some 60 per cent of consumers remained gloomy about theirs.
Robertson added: “With finances under pressure, consumers are becoming increasingly savvy with 65 per cent saying they are switching to cheaper grocery brands – often own-brand labels – to stay within their budgets.
“Competition within the sector is helping to take the edge off price inflation with a larger number of promotions and discounts on offer.
“Against this backdrop the small increase in consumer confidence is encouraging, but retailers won’t be expecting to benefit from it for some time yet. We’re unlikely to see a sustained rebound in consumer confidence until genuine signs of a strong economic recovery gather momentum.”