The belief that consumers are tightening their belts as fears for the economy grow has been confirmed, following the release of findings from market research house Neilson and the British Retail Consortium (BRC).
The survey of 1,000 people found that almost 40% of respondents are intending to save, making it the number one priority for spare cash.
The current atmosphere of consumer caution is unlikely to please retailers, who are relying on Christmas spending to boost annual sales figures.
“Retailers are facing a very challenging year,” said Kevin Hawkins, director general of the BRC. “Not only is a severe slowdown in consumer spending likely but retailers’ share of that spend is set to fall significantly, rachetting price competition up still further.”
‘The economy’ is cited as the biggest concern for consumers, which is almost double from 17% a year ago.
In the event of an economic downturn, consumers worried about inflation (43%), unemployment (40%) and interest rate rises (37%). Compared with this time last year, 50% more people consider it to be a ‘bad’ time to buy necessary items.
The BRC has put this down to a combination of factors, including slow wage growth, increases in interest rates and high petrol prices.
Mike Watkins, senior manager of retail services at Nielsen warned: “Consumers will be thinking twice about splashing out this Christmas. A higher cost of living is putting the squeeze on the consumer wallet and it will be ever more important for retailers to offer real value for Christmas shoppers.”
“Looking forward into 2008 I expect caution to remain with us, with confidence returning only when the pressure on consumers’ monthly budgets falls,” he added.
© Crimson Business Ltd. 2007
