Consumer confidence takes a hit as redundancies taint high street

GfK Consumer Confidence Index
Consumer confidence in the general economic situation has declined
// Consumer confidence has remained unchanged for the second month running
// Concerns over personal financial situation over the past year dropped to a mere -5

New research has found that consumer confidence has remained unchanged for the second month running, suggesting that consumers have growing concerns over the UK’s economy.

Shopper confidence at -27 in August, according to the GfK Consumer Confidence Index, down from -14 in the same month in 2019.

Concerns over personal financial situation over the past year dropped to a mere -5, down one point on the previous month and four points lower than August 2019.


Consumer confidence in the general economic situation also declined by one point for both the past 12 months and looking ahead to the next year, to -62 and -42 respectively.

Meanwhile, confidence over the next year rose by a mere +1, which is one point lower than August 2019, as consumers continue to utilise the Eat Out to Help Out scheme and receive government furlough.

The major purchase index increased by one point to -25 in August, 26 points lower than last year, while the savings index remained the same at +21.

“Circumspect consumers report they are more confident about their personal financial situation over the next year but the uptick from zero up to +1 does not amount to much, and this can change quickly when furlough ends and the inevitable redundancies start,” GfK client strategy director Joe Staton said.

“Employment is now the big issue because the pandemic has ended years of job security. Yes, discounted dinners have proved a winner with hungry consumers across the country this month, but it’s difficult to see any increased appetite for other types of spending for now.

“While our major purchase index managed to increase by one point in August, the economic headwinds are not favourable as we enter the key retailing months at the end of the year.”

A number of major retailers recently announced they were cutting jobs as part of a cost-cutting strategy.

Frasers Group said earlier this week that it plans to invest “in excess of £100 million” on  its digital elevation strategy and warned of more store closures as it continues to shift its focus towards online.

Marks & Spencer also confirmed it will axe a total of 7000 jobs over the next three months as part of its efforts to transform the business amid the Covid-19 pandemic.

The job cuts are expected to take place across its stores, regional management and its support centre.

Most recently, around half of UK shoppers said they believe the coronavirus pandemic will have a permanent impact on their habits, according to research by O2 Business and Retail Economics.

The study revealed that 44 per cent think they will see permanent changes to the way they shop, with many saying they expect to shop online more regularly.

The survey showed that 47 per cent of shoppers think the number of times they shop online will definitely increase.

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