// UK consumers are expected to rein in their spending this festive season as household budgets tighten amid the cost of living crisis
// Nearly a fifth fewer shoppers are expected to be out and about in December this year than pre-pandemic
UK shoppers are expected to spend £4.4bn less on essentials ahead of Christmas – a 22% drop as the rising cost of living cuts into their spare cash.
According to research by Retail Economics with retail technology firm Metapack, nearly 60% of shoppers expect to cut spending on non-food items in the so-called “golden quarter,” the last three months of the year, when most retailers make the most profit.
The forecast puts additional pressure on businesses, which are already facing higher energy and labour bills, as well as rising commodity costs, forcing many to cut hours.
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The Holiday Shopping Trends Report found that British consumers are expected to cut back the most, with over 70% of customers expecting to reduce spending in some form.
Most consumers cited rising prices as a major concerns, as UK inflation runs near 40-year highs at 9.9%.
This December, shoppers are expected to be nearly one-fifth fewer than before the pandemic, with numbers predicted to rise by just 4.2% from last year, when the Omicron threat kept many at home.
October and November are expected to be even worse than last year, with falls of 2.1% and 2.7%, according to Springboard.
The shift to online shopping is expected to slow as higher shipping and return costs for returned items lead to higher fees. Just this week fashion giant H&M said it is considering charging fees for online returns as the number of refunds rise by 30%.
Retail Economics chief executive Richard Lim said: “Inflation will peak at just the wrong time for retailers. Buyers’ budgets are already under intense pressure as inflation in international markets hit a ten-year high. Consumers are worried, budgets are under pressure, and households are set to cut spending this year in an attempt to make ends meet.
“Amid weakening consumer demand, retailers are also facing a pincer move as costs and operating costs rise, which are testing business models to the breaking point. With profit margins under intense pressure, some retailers are planning to shift shipping and return costs to areas that encourage consumers to look for alternatives.”
Clothing and footwear retailers, which boomed over the summer thanks to the return of socializing and big events like weddings, look set to be hit the hardest, with just over a quarter of consumers looking to cut spending in this area.
Alongside other retailers, Next has already slashed its sales forecast and profits for Christmas due to an expected downturn, warning of tough times ahead next year.
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