The latest consumer confidence figures from GfK show Brits have cut back on making major purchases at the worst possible time for retailers.
In November, GfK’s major purchase index, which ranks Brits’ propensity to spend money on big ticket items such as electricals, fell six points to a score of -6. To put this into perspective, in November 2016 this was 11 points higher at a score of 5.
According to Joe Staton, head of market dynamics at GfK, this isn’t a sign consumers are buying their Christmas presents late. Instead, he believes reality is kicking in and Brits are preparing for a budget Christmas.
He tells Marketing Week: “There was a ‘live now, pay later’ mood for quite some time – but it looks like a sense of reality is now kicking in. Brits have every right to feel glum in the face of the gloomy economic forecasts.
“Many retailers will be hit by the slowdown in consumer spending as households begin to feel the pinch and cut-back on their budgets. The confidence trajectory is unquestionably negative and sadly no amount of tinsel or baubles will change it.”
Elsewhere, the overall consumer confidence index fell two points to -12 – four points lower than the same period a year ago. This marks the twentieth consecutive month that it has been in negative territory. And the measure around the public’s perception of the general economic situation over the past 12 months (-32) and over the next 12 months (-28) fell by three and two points respectively. In fact, six of the seven GfK scores suffered a fall in November.
Perhaps tellingly, the only score to record a rise was the savings index. Staton concludes: “The combination of holding back from spending and looking to save more fits the current economic environment much better, with the expectations of slower growth and the Brexit twists and turns doing little to enhance the consumer mood”