While 43% of consumers expect to spend less, more than one in four are planning savings on food, and nearly one in three expect to spend less on alcohol. Forty-two percent plan to spend less on holidays.
The survey further found that 67% are now ‘extremely concerned’ over the rising cost of living and 34% plan on spending less on presents for friends and family.
In addition, EY surveyed UK consumers just after the mini-budget in October and found consumer confidence at an all-time low, with just 26% of respondents saying they are confident about the future – compared to 50% in June – while 43% expected to be financially worse off in 12 months.
However, high income consumers are more than three times less likely to see themselves as financially worse off this time next year (14%) than low income consumers (51%).
Furthermore, responsible consumerism is still a key consideration for shoppers.
Silvia Rindone, EY UK&I retail lead, commented: “As consumers look to cut back spending, retailers and brands will need to understand the price sensitivity of their customers and react accordingly if they want to continue to win spend in the run up to Christmas.
“Navigating this K-shaped consumer profile will require retailers to cater to financially resilient high-income consumers, while also appealing to mid- and low-income consumers with value-focused ranges and pricing that reflect their budgets.
“While affordability is a major concern for consumers, they still want to do the right thing from a sustainability perspective and responsible consumption ticks the box for both priorities. This shift towards more considered shopping behaviour will have profound implications for brands and retailers, as consumers start to prioritise durability and quality over fashion.”
