Consumers are not willing to splash the cash
The Christmas spending season is well under way, but there are some worrying signs for UK retailers in the latest Bloomberg/YouGov Household Economic Activity Tracker (HEAT).
Particular concern is warranted around consumers’ willingness to purchase big ticket items, which can make or break a brand’s Christmas retail season.
The report found that UK consumers have considered themselves less capable of making major purchases as 2010 has progressed.
CONSUMERS LESS CONFIDENT
As the graph shows, since June this year consumers have become steadily less confident that it is a good time to spend money on big ticket items: October’s net buying intention score was -31 per cent.
These figures put consumer spending intentions below what they were in October 2009 (net -24 per cent), suggesting that November and December 2010 could also struggle in comparison with last year.
Some retailers are looking to head off upcoming difficulties by offering time-sensitive promotions, like Sony’s promise to return VAT on pre-Christmas purchases.
This unwillingness to commit to big spending is also concerning when considered in the context of the fact that one in four respondents said that their household had saved less money in October than in September.
Consumer attitudes to spending suggest that money not saved is not being spent immediately: YouGov respondents were asked what they would do with a windfall of one month’s income; a question which acts as a proxy to judge how bullish consumers are feeling about spending. A majority of 80 per cent claimed they would either save it or use it to pay off existing debt, rather than spend it.
Brands will have to work hard in order to get consumers to part with their hard-earned pounds this year.
Stephan Shakespeare is co-founder and chief executive of YouGov.