Average consumer spending is set to drop by nearly £100 this Christmas compared to 12 months ago, in a bitter blow for businesses this festive season.
The 16 per cent drop – from £554 in 2021 to £463 this year – is blamed on the cost-of-living crisis. More than a third (37 per cent) of people say they have no money left to spend on presents after paying food, energy and household bills.
It comes as the Goverment’s latest figures show the economy actually grew by 0.5 per cent in October following a three month shrinking in July, August and September, leading to a recession warning.
Fifty per cent of people also plan to cut back spending on socialising this Christmas, according to a survey carried out on behalf of tax and audit experts RSM UK, which has offices in Stoke-on-Trent.
The research suggests that, as a result, the retail and hospitality sectors face a “grim” start to 2023 – with job losses and store closures likely to rise.
RSM UK’s Head of Leisure and Hospitality Paul Newman said: “The festive trading period is when most hospitality businesses make the majority of their profits for the whole calendar year. With last year’s festivities severely impacted by Omicron, 2022 needs to deliver if the sector is to avoid a grim start to 2023 with a swathe of closures and job losses.
“A 50 per cent planned cut back in spending on socialising could signal the writing on the wall for some businesses which are already teetering on the edge and need a strong Christmas to survive to fight another day.”
The survey among 1,000 consumers found that 83 per cent were ‘very’ or ‘quite concerned’ about the cost-of-living crisis.
It also highlighted that 49 per cent expect to spend less on clothing during the festive period and toys, presents and stocking fillers will also take a hit with consumers planning to cut their spend on them by 43 per cent, 42 per cent and 40 per cent respectively.
RSM’s Head of Retail Jacqui Baker added: “Our survey showed that nearly every category across retail would be impacted by dwindling discretionary spend this Christmas which is bad news following mixed results during Black Friday.
‘The worst news came for fashion retailers who need to shift the multitudes of sequins they buy for the festive party season. Consumer footfall has been falling in recent weeks and the rail strikes are only adding to dampening consumer demand. On top of this, the mail strikes are seriously impacting on delivery times and turning consumers away, creating more headaches for retailers.”
- Businesses that are experiencing issues are being reminded that practical support and advice to help guide them through turbulent times is available through the Staffordshire Chambers of Commerce.