06 November 2023
- Millennials (55%) and Gen Z (52%) plan to bring forward Christmas spending this year to spread the cost and take advantage of promotional activity during the Golden Quarter.
- Overall average Christmas spend down when you factor in inflation at £467
- Gen Z are expected to spend the least this Christmas at £446
- Over a third of younger consumers will fund Christmas on credit this year, despite high interest rates
Savvy millennials and Gen Z plan to hit the high street early this year to spread the cost and take advantage of seasonal sales events as mounting cost of living pressures hit in the build up to Christmas.
A survey of 1,000 consumers conducted on behalf of RSM UK showed that over half of all millennials (55%) and Gen Z (52%) plan to bring forward Christmas spending this year.
Gen Z also plan to spend the least at £446, with millennials following closely behind at £449, as they plan to take advantage of Black Friday and Cyber Monday deals to bring down the cost of Christmas.
Overall, the average spend this Christmas remains flat as cost-conscious consumers plan to spend on average £467 when compared to £463 last year. However, when you factor in inflation at 6.7% consumers will have less to spend this year, so ‘real’ budgets’ will sit at £438.
Over a third of Gen Z (36%) and millennials (31%) will use some form of credit (credit cards, buy now, pay later arrangements, overdraft and taking out a loan) to fund their Christmas spending. Whilst this shows younger consumers aren’t being put off by high interest rates, it also suggests some are having to resort to borrowing as their finances continue to be stretched.
Jacqui Baker, head of retail at RSM UK, said: ‘Savvy shoppers, particularly younger consumers, plan to hit the high street early to bag a bargain – spreading, and reducing, the cost of Christmas, whilst avoiding any potential delivery and stock issues that we saw last year.’
The biggest cutbacks in Christmas spending will be on homeware (46% will spend less), clothing (42%) and socialising (41%). But the top areas that consumers plan to spend more are on Christmas dinner (25%), food and drink at home (24%), and presents (23%).
When asked about their finances, 52% of respondents said they felt comfortable financially, an improvement from 47% last year. But 17% of consumers are not comfortable financially, down slightly from 20% last year.
Jacqui Baker, continued: ‘Despite sentiment improving slightly, consumers are still having to make considered purchases, whilst cutting back in other areas. Unfortunately for homeware and clothing retailers, it looks like they’ll be taking the biggest hit. Sales figures in these two categories have already been subdued over the past few months, meaning retailers will have to work hard to shift seasonal stock early in the Golden Quarter.’
Robyn Duffy, consumer markets senior analyst at RSM UK added: ‘Prospects for this year’s Golden Quarter are in the balance with inflation squeezing spending and a sharp fall in consumer confidence in October. This will put greater onus on sales events such as Black Friday and Cyber Monday this year as consumers look to make their budgets’ stretch further.
‘The name of the game for retailers this Christmas is going to be pulling back lost margins, so some consumers might be disappointed by promotional activity this year as retailers keep sales events short and sharp to maximise full price sales through this critical trading period.’