Unpredictability and sustainability: the big consumer confidence disruptors

More than two in five people in Northern Ireland say they’re going to reduce their spending or postpone big ticket purchases directly because of the UK’s planned exit from the EU according to the latest retail research from PwC NI.

The survey, which measures consumer sentiment in the UK, found that overall people in Northern Ireland, along with people aged between 55 - 64 and those on benefits, are the least optimistic about their financial situation.

More than double any other region, 23% of Northern Ireland respondents said they hadn’t changed their spending behaviour in the last twelve months and that Brexit will impact on how they spend or save over the next year.

The top three areas where consumers do expect to spend more are going out, home improvement and groceries. Holidays and significant home spending like furniture and home appliances, as well as eating out and technology, are most likely to be where consumers save money in the next twelve months.

There were significant swings in confidence amongst the age groups in terms of disposable income over the next 12 months. Bucking recent trends, those aged between 18 – 24 are the most confident with 55% believing they will be better off. While the over-65s who have historically been the least optimistic, are now more optimistic (19%) compared to 55 – 64 year olds (15%) and for the first time, the 45 – 54 age group (18%).

For the first time in the researches 11 year history, clothing has emerged as the number one area for reduced spending for those aged under 45 potentially putting a break on the rapid growth of both online and store-based fashion retailers.

For the over 45s, big ticket items continue to be hardest hit by cutbacks, and eating out also fell into the top three list for spending less, with consumers preferring to eat in with food delivery and meal kits.

Martin Cowie, Partner at PwC NI, commented:

“Unpredictability and sustainability are the two biggest disruptors impacting on consumer confidence in the current climate.

“The six-month Brexit delay has done little to bolster consumer confidence in Northern Ireland, and what we’re seeing now is people here catching up with the way consumers in other parts of the UK changed their financial behaviours’ in the last year. This year we’re now the most likely to adapt how and where we spend and save our money.

“People in the 45 – 64 age group are also growing more pessimistic, with uncertainty about job security, saving for retirement and concerns about paying for their children. Those over-65 are slightly more confident, with the triple lock to state pensions and pensions’ freedoms for private pensioners giving security to some, though the majority still believe they’ll be worse off in the next twelve months.

“And it’s interesting to see that for the first time ever in our survey, clothing has emerged as the number one area for reducing spending for those aged under 45. Though the fast fashion sector has been a stand-out success in recent years, tightening belts as well as an increased focus on sustainability is impacting on consumer’s shopping habits. This forecast will further impact on the confidence of the high street, as well as online retailers who are also facing pressures from calls to pay a special additional tax to support the bricks-and-mortar sector.”

 

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