Consumer Sentiment Survey - Summer 2021

Vaccines driving another record sentiment as spending priorities start to return to pre-pandemic levels

Our latest findings show another marginal increase on March’s record high, following the surge we saw in the spring. At +10, consumer confidence is now 36 points higher than it was at the start of the pandemic. This increase comes despite the enforced delay to the easing of all restrictions announced by the government in June.

Positive sentiment across all ages and locations

The high levels of consumer confidence across all age categories once again appear to be driven by the success of the vaccination rollout. There were early signs in our March survey, with over 65s significantly contributing to the increase in sentiment on the back of being offered at least a first vaccination. This time, we’ve seen noticeable improvements across those aged 35-64 - the age groups vaccinated between March-June. Despite a slight levelling off, those under 35 remain the most positive, even before the impact of any vaccine bounce.

And consumers are not just net positive across all age groups, but across all regions, too. London leads the way, with almost a third (29%) believing they will be better off over the next 12 months than they have been. The Midlands and Scotland are the next most positive regions, with 14% and 13% respectively expecting to be better off over the next 12 months. However, consumer sentiment does reveal a growing wealth divide, with the unemployed and benefit-dependent the only demographic group with a net negative sentiment.

Will uncertainty over a return to normal affect spending?

Confidence may have been even stronger, but there are signs that people think things aren't quite back to normal yet, as many consumers reassess their timescales for a return to pre-pandemic scenarios.

Generally, people are more realistic about timeframes than they were when we asked the same question in December. Previously, most thought things would be back to normal by Autumn 2021; now, while the results are more polarised, 63% don’t expect it to happen until at least 2022 (vs 27% in December). Many expect some pandemic-related disruption this Christmas, too: a third expect to stay at home with only immediate family again this year, compared with 24% normally (and over 50% last Christmas, when the country was affected by tier restrictions).

Category spending returning to normal

Category spending priorities are moving closer to pre-pandemic patterns. As before, with the exception of our March survey, most consumers expect to spend more on groceries. Others are looking to increase spending on hospitality and leisure activities, particularly eating out and going out. But this spending is becoming more balanced after the initial exuberance immediately following hospitality’s reopening. In March, for example, the ratio was 3:1 in favour of spending more on going out; now, it’s similar numbers expecting to spend more as spend less. 

Elsewhere, improving home is another category where we expect to see an increase. That focus has largely been driven by three factors: people being at home more, redirected holiday spending, and the current boom in the property market.

In less positive news, we’re seeing anticipated spending on holidays and fashion begin to plateau.

As we move closer to normality, it’s still a little unclear which categories will ultimately end up as winners and losers. Hospitality is likely to perform well, at least in the short term, as will home. Because of current restrictions, holidays look likely to struggle, but any changes to guidance could see fortunes transform rapidly. 

What do the findings mean for the high street?

These recent results should make positive reading for the high street: confidence is up, people have spare cash and they are keen to spend. This may improve further as restrictions ease, we return to normality and people become increasingly comfortable returning to pre pandemic activities. For hospitality and leisure, while future spending intentions are not quite as strong as in March, consumers are still far more optimistic than in previous years, suggesting that they are still keen to revel in the novelty of places being open.

But we do need to be cautious around these findings. Consumer optimism should be balanced against the impact of any remaining restrictions in place and the tapering of government financial support, which may see some demographics struggle disproportionately. There is a potential for the wealth divide to be exaggerated by the end of the furlough scheme and greater post-pandemic job insecurity affecting the young and less affluent.  

Perhaps more importantly, and despite high sentiment levels, consumers now have increased choice over where to spend and what to spend on as all restrictions are lifted. Retailers and leisure operators will still have to work hard to persuade consumers to spend with them. That means being ready to capitalise by embedding agility and understanding their consumers: who they are, who they trust, where they shop and engage, and where they will spend time now and in the future.