IPA data points to Christmas spending crunch

Two-thirds of consumers plan to cut back their Christmas spending due to the cost of living crisis according to the IPA

Nicola Kemp

Editorial Director Creativebrief


Christmas in July might inherently feel like peaking too early. Yet for retailers, the advent of the summer holidays also marks the kick-off of Christmas communication plans.

Yet as retailers share festive products and previews with the press, the IPA has signalled a note of caution. According to its data almost two thirds of UK adults will be cutting back their Christmas spending this year due to the cost-of-living crisis.

The survey of 2000 UK adults, commissioned by the IPA and carried out by Opinium, which was published today (27th July) reveals that 64% of all UK adults will be cutting back their spending versus last year, due to the ongoing pressures of the cost of living. This figure is particularly pronounced for those aged between 18 and 24 years old, with 82% planning Christmas cutbacks, and for all adult women at 68% vs all adult men at 60%.

Jamie Britton, Senior Insight Manager, IPA, explained: “This survey reveals the true impact that the prolonged cost-of-living crisis, coupled with rising interest rates, is having on consumers’ spending plans. It is particularly significant here given that the Christmas season is known to be the season for giving.”

He continued: “To navigate this tough environment, brands must pay attention to these consumer intentions and ensure they are gauging and appealing to the mood of the nation in both their advertising and their seasonal offerings.”

Festive spending under pressure

The research reveals that the festive belt tightening will impact the hospitality sector. Almost a quarter (24%) of all consumers stated that they will be reducing their spend on meals out. While almost a fifth (19%) will reduce their visits to bars and clubs.

Meanwhile, among other cutbacks, 23% of respondents say they will be reducing their spend on new clothes. While 21% will be cutting back on presents for extended family. The research also suggests headwinds for traditionally strong festive categories with 20% saying they will scale back their spend on premium groceries and drinks.

The importance of value

The research reveals an increasingly mindful approach to festive spending from consumers. Almost half of consumers are using their savings to finance festive spending, rising to 58% amongst 18 to 24-year-olds.

However, 13% of adults intend to use credit to pay for Christmas shopping rising to 17% of 35-54s, while 10% will be using ‘Buy now, Pay later’ schemes, rising to almost double that (19%) for 25-34s.

Value is set to be top of the festive marketing agenda again this year, with research revealing that consumers will be hunting for bargains. Over half of UK adults (51%) intend to spend during Black Friday. While a third (33%) intend to spend up to a quarter of their Christmas shopping budget on Black Friday sales.

This figure is considerably higher for the 18-24 age range with 79% of 18-24s intending to shop during Black Friday and 43% intending to spend up to a quarter of their Christmas budgets then. In addition, nearly a quarter of all adults (22%) and 50% of 18-24s are planning on taking part in Boxing Day and January sales.

The growth of the circular economy

The research also points to changing attitudes to sustainable shopping in the midst of the climate crisis. Data which suggests that habits are finally changing. With the cost-of-living crisis continuing, there is an increasing acceptance of second-hand gifting for Christmas this year, according to this latest survey. Two-thirds of all adults (67%) state that they would be happy to receive a second-hand or refurbished gift, with the most popular options being books (34%), jewellery (21%) and clothes (20%).

In addition, almost half of people would consider giving a second-hand or refurbished gift to an adult (49%) or child (51%). Key considerations when giving second-hand or refurbished gifts are affordability (47%), a greater chance of a bargain (35%), sustainability (33%) and the proceeds going to a good cause (31%).

Notably, the research underlines the growing importance of sustainability when it comes to purchase decisions. Almost a third (31%) of UK adults say they are more likely to do Christmas shopping with brands and retailers that prioritise sustainability. This rises to 51% amongst those aged 18-34 While half (50%) are open to purchasing Christmas gifts from new and emerging brands. In addition, around a third (31%) are open to using AI for Christmas gifting ideas this year, rising to over half (51%) in the 18-34 age group.

In terms of the communications from brands around Christmas, most consumers want them to be festive (37%), funny (21%), nostalgic (20%) and value-focused (20%). In addition, nearly half (46%) of consumers want to see Christmas advertising that reminds them of better times. The new nostalgia it seems is the promise and reminder of the certainty of the past, in a consumer ecosystem of never-ending uncertainty.

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Christmas cost of living