Member Article

Ho-ho-holiday spending defies cost-of-living crisis as 69% of consumers plan to increase or maintain festive purchasing

New research from leading international payment service provider and UK and Europe direct bank card acquirer, Ecommpay, reveals that 80% of consumers changed their spending habits this year due to the cost-of-living crisis. However, over two-thirds still plan on increasing or maintaining their online spending for the festive season (69%).

A challenging year hasn’t dampened festive spirits Inflation along with 14 consecutive interest rate hikes in the UK hit consumers hard in 2023, with three in five having generally spent less as costs rose (60%). While a quarter resorted to credit services such as credit cards and Buy Now Pay Later (BNPL) to afford purchases (25%). However this hasn’t damped their Christmas spirit, with only a quarter of shoppers planning to decrease their online spending for the rest of 2023 (25%). Of this, it’s the younger generations that are the most likely to decrease their holiday spending with this figure rising to one-third for Gen Z (36% of 16-24 year-olds).

Even with transaction volumes lowered during the recent Black Friday retail event, consumer purchasing intent looks bright for festive shopping. Almost a quarter of consumers (22%) plan on increasing online spending this holiday season, with around half planning to maintain current spending levels (47%). Men are most likely to increase their online spending (29%) compared to female consumers (15%), with tech-savvy millennials also expanding online purchases (42% of 34-44 year-olds). In one of the shopping capitals of the UK, two in five Greater Londoners are getting into the festive spirit with a surge in online spending planned to end the year (41%).

Positive signs for 2024 spending With the effects of inflation impacting all industries, consumers have had to make the difficult decision on what they will spend and where they will cut back. The research found that in 2023 over half of consumers (57%) spent more on groceries and health, while almost a third cut back on apparel and beauty (31%). This was closely followed by consumers spending less on arts and entertainment (30%), travel (30%), electronics (28%), and toys, hobbies and sports (28%) as consumers made tough choices on essentials and nice-to-haves.

As retail sales hit two-year lows, encouragingly for 2024 spending almost two-thirds of consumers are planning on increasing or maintaining their current online spending in the coming 12 months (63%). With less than a third planning to decrease spending (28%) and only 9% as yet unsure of their online spending intentions next year, retailers can see clear signs of the much-needed green shoots of recovery.

Moshe Winegarten, CRO of Ecommpay, comments: “Despite the impact of the cost-of-living crisis throughout 2023, UK consumer’s spending intentions are encouraging for retailers as we end the year. This is anticipated to be a sign of things to come, meaning online merchants can be cautiously optimistic for 2024.

To make the most of this boost in spending, online retailers must ensure they have the right payment systems in place for a smooth checkout process. This means a variety of payment options must be offered – from major bank cards to popular regional payments – as this is often the hurdle that can lead merchants to miss out on these all-important end-of-year sales.“

This was posted in Bdaily's Members' News section by Lucie Hayes .