How are consumers shopping for Christmas 2022 amid the cost-of living crisis?

The cost of living crisis is driving consumers' demand and spending on a all time low. Consumer confidence decreases, making Christmas unlike any other year.

Cost-of Living Crisis In Brief:

Soaring inflation is affecting households now more than ever, making consumers cutting back on their spending for gifts. The current UK inflation rate updated by The Office of National Statistics in November 2022 is 10.7%.

According to EY, 67% of consumers are extremely concerned with the rise of cost-of living. Low income households are shown to be the most vulnerable, as they now have to pay the majority to food, energy, and transport costs. Their budget has little to no flexibility in coping with crisis.

Christmas Holiday

Celebrating the holiday isn't just about buying gifts! The following statistics suggests consumers are being more conscious with every purchase:

• 54% are spending less on take-outs and deliveries

• 47% are spending less on consumer electronics

Being aware of consumers' concerns, brands push their discounted programs early. For example, Amazon had a second 'prime day'. This allows their merchandise to exit and a way to get ahead of the competition during this busy season. Customers are also doing their shopping early to avoid any shipping delays, due to the ongoing strike.

Consumers stocking up on food early as they are aware that it is the commodity that is expected to be more expensive. The price of food and non-alcoholic beverages have risen to 16.4% in October 2022. However, since these are necessities, consumers are still purchasing them despite the price increase.

Source: Official National Statistics

According to Statista, the UK in comparison with the other European countries seems to have higher concerns in relation to cutting all of their expenses:

Source: Statista

In coping with this new event, consumers are now always on the lookout for bargains and sales. Brands should push their promotional activities strongly to encourage consumer spending.

The Retail Sector

According to the Financial Times, UK retail sales has gone down 0.4% in November. Surging prices of energy, gas, interests rates and the incoming recession has put retailers in a difficult position to cope with them all at the same time. Not to mention, they already are facing problems with issues like Brexit, Covid-19, and shipping disruptions.

How can retailers respond to the crisis in the future?

• Offer cheap alternatives to draw consumers' attention and outcompete rivals

• Deals and bundles on products to engage customers with buying more

• Personalize customer experience and being customer-centric. Adding creativity to make customers come back for more. This could be making the purchase and shopping experience convenient for them as much as possible. (ex: Canada Goose let customers experience their coats in -27 degrees cold rooms, revenue increased by 15% in 2020 despite store shutdowns)