Consumers unwilling to spend as Christmas quarter approaches

Consumers remain unwilling to make big purchases due to concerns about their personal financial situation over the coming year, a big concern for marketers as the key Christmas trading quarter approaches.

GfK’s monthly consumer confidence index shows that while the propensity to make a major purchase increased by four points in September compared to the prior month, it still sits at -21, way down on the score of three a year ago.

Consumers’ views of their personal financial situation over the coming year is at just one, compared to four a year ago. While views over their personal financial situation over the past 12 months is at -7, two points down on August and nine points down compared to a year ago.

GfK’s client strategy director Joe Staton tells Marketing Week: “Although we’re seeing an improvement in the overall index score this month, the two key measures of interest for marketers – the major purchase index and consumers’ views on their personal financial situation for the coming year – remain depressed, continuing to rumble along in negative territory.

“These indices are key in the Golden Quarter. Lack of confidence points to shoppers being even less likely to splash any cash they might have, choosing to save and prepare for the long lockdown winter months ahead. As ever the challenge is to unlock this unwillingness to spend with great brands, at a great price, in-stock and on-demand making shoppers feel valued by delivering great value across all price points.”

Overall consumer confidence, while slowly starting to rise following the nadir in the midst of the pandemic, remains heavily negative. It came in at -25 in September, a two-point improvement on the prior month but well below the -12 recorded in September 2019.

Consumers remain hugely concerned about the economy in particular, with the situation over the past 12 months scoring -61, still well down on the score of -32 a year ago when the worries were about Brexit. Their views over the next 12 months sit at -38, a slight improvement on the prior month but still behind perceptions a year ago.

The study was completed between the 1 and 14 September, so before the latest rise in Covid-19 cases and accompanying new restrictions. However, even before this consumers were “jittery” about the outlook, according to Staton, who would not bet on confidence rising any further in the coming months.

“Consumer confidence has crept forward for nearly four months now but can this fragile improvement last or is it about to come to a grinding halt?” he asks.

“Consumers are as jittery as stock markets right now and as the UK government puts the brakes back on – and there may be more to come – only an unbridled optimist will bet on confidence climbing further.”