Retail Outlook: what's in store for the UK retail sector?

Our latest survey shows that consumer sentiment has bounced back following the EU referendum.

Join the conversation on twitter: #PwCRetailOutlook

Despite subdued retail sales in an unseasonably warm September and consumers telling us that they planned to spend less at Christmas, there were still some key reasons to be cheerful:

  • Consumer sentiment had rebounded following the post-EU referendum dip.  With employment levels still high and price inflation yet to hit the shops, the majority of the UK now believes they will be better off in 12 months than worse off
  • Following the trend towards leisure and experiences last year, consumers both here and in the US told us they would be shopping for “things”, and, if anything, they might cut back on leisure (going out, eating out, etc.) to help fund it.

Register for our events to gain more insight into consumer trends and analyse the data from our most recent survey below.

 

Retail Breakfast Briefings - January 2017

Join us as we review 2016 Peak trading


Here were our twelve predictions for the retail Christmas

Consumers think they’ll have more to spend…

PwC’s latest consumer sentiment survey has found that the majority of us think we will have more disposable income in the next 12 months. This is a reversal of our post-referendum survey in July, and sees sentiment reverting to the same level as earlier in 2015. Every region in the UK thought they would be better off, with the exception of the North of England and East Anglia.

retail-outlook-0

See more...

…even though they say they’ll spend less on Christmas

One in three plan to spend less over Christmas, compared with one in ten planning to spend more. This is a pattern repeated across all age groups and regions in the UK, with the Scots and Welsh expecting to tighten their wallets the most. 6% of us don’t intend to buy any Christmas presents at all this year. However, with more money in their pockets, the spirit may be willing, but the temptation to spend more may be too great.

retail-outlook1

See more...

They’re planning to shop early…

According to PwC’s survey, 27% of consumers are planning to shop for Christmas presents earlier this year than last year. In fact, more than a third of consumers expect to do most of their shopping before 25 November, and only 7% (mostly men) intend to leave it for the week before Christmas.

retail-outlook4

See more...

…but not over Black Friday weekend

Only 13% of consumers are planning to do their shopping over Black Friday, with Londoners the keenest to bag a Black Friday deal. As Ted Baker founder and CEO, Ray Kelvin, stated “No one wants a Ted Baker gift bought in the Sale” [1].

See more...

We still think there’ll be a last minute rush…

With Christmas falling on a Sunday, and many people travelling home and stores closing early on Christmas Eve, many observers think the biggest shopping day will be Friday 23 December [2].

See more...

…provided the weather doesn’t get in the way

October, November and December have been warmer than average for the last three years in a row. If 2016 reverts to the long term average, a chillier than recent run up to Christmas could be good news for clothing retailers, unless we get the snow which depressed retail footfall by 7% before Christmas 2010 [3].

retail-outlook2

See more...

Shopping under one roof…

If the weather does turn out to be colder this year, and with petrol prices set to rise due to currency fluctuations, we expect shoppers to prefer “one stop shop” locations, whether they be destination shopping centres or department stores, where they can get everything under one roof with less driving and less exposure to the elements.

See more...

…or from the comfort of your own home

While store sales have grown by barely 1-2% over the last year, online sales have continued to grow in double digits. As consumers expect to shop earlier this year and retailers have continued to invest in logistics and final mile delivery solutions, will click and collect growth slow, as consumers come to expect more reliable and convenient home delivery?

See more...

From things, to experiences…back to things?

One of the most talked about trends last Christmas was the advent of “Peak Stuff”, as consumers spending grew more quickly on leisure than retail. However, our US colleagues have started to see this trend reverse, especially amongst Generation Z (under 21s), who are more interested in tangible gifts, like personal electronics, clothing and toys, than experiences. Will their preferences rub off on other generations? What we can tell is that, as a direct result of the EU referendum, 16% of consumers expect to spend less on eating out and 16% less on going out, so it’s possible that economising on leisure could help fund more spending on retail.

retail-outlook3

See more...

Gifts crafted for you

PwC’s US consumer survey also found that three-quarters of shoppers planned to shop at local retailers and a third would give handmade gifts over the holiday season. For UK retailers, does this signal a boom in personalised gifts and the crafts sector?

See more...

Spending less on electronics and toys…

With no major consumer electronics product launches anticipated in the final quarter of the year, Currys PC World’s top Christmas product predictions [4] feature relatively small ticket wearables, smart toys and kitchen aids, while Argos’s top toy predictions [5] include dolls and cuddly animals. Without significant innovation, perhaps it’s no wonder that consumers expect to spend less on electronics (24%) and toys (23%) this year.

retail-outlook5

See more...

…but Christmas dinner is safe

While consumers say they will spend less across the board, they won’t be skimping on Christmas dinner itself. Only 13% expect to spend less on the traditional festive feast. So it seems that some traditions are still too important to be compromised over.

See more...

References: [1] Drapers Online, [2] Business Insider UK, [3] Telegraph, [4] Dixons Carphone, [5] ToyNews

 

Background

  • PwC undertook its regular survey of consumer sentiment in September 2016
  • We asked questions to a nationally representative sample of 2,050 consumers
  • We have been measuring consumer sentiment every 3-4 months since 2008, using the question: "Thinking about your disposable income (after household bills, credit cards, etc.), in the next 12 months do you expect your household to be better off or worse off?”

 

 

Explore the data

Click below to find out how consumers responded when asked how they think their disposable income will be in the next 12 months:

View as aggregate

View by gender

View by age

18 - 24
25 - 34
35 - 44
45 - 54
55 - 64
65+

View by affluence

AB
C1
C2
DE

 

 

 

Contact us

Lisa Hooker
Partner, Transaction Services
Tel: +44 (0)7802 882562
Email

Kien Tan
Director, Retail Strategy
Tel: +44 (0) 20 721 23910
Email

Follow us