British Consumers Make Spending Cuts Across the Board

07 August 2008

LONDON: The credit squeeze is affecting every aspect of UK consumer spending from grocery shopping to holidays, according to a new survey by PricewaterhouseCoopers.

It reveals that 43% of consumers expect to cut back on eating out, 37% will rein-in spending on electronic goods, and 33% will cut apparel purchases.

The knock-on effect of enforced parsimony is likely to be the loss of more than 100,000 retail jobs by the end of this year.

Another third of respondents say they plan to shop at cheaper supermarkets to cut food bills, and 30% will spend less on their annual holiday.

Comments Olivia Gillan, a PwC retail partner: "People are getting more and more nervous, and the pace is accelerating. For retailers and leisure operators, it's going to be a survival of the fittest."

She added that mainland Europe-headquartered discount supermarket chains such as Lidl, Netto and Aldi were expecting increased market share as consumers adjust their gourmet expectations.

She says: "The impact of the early 1990s recession on the grocery sector was very limited . . . This time round, the sector could be hit harder if consumers rein-in their spend by cutting out unnecessary luxuries and trade down to cheaper rivals."

In addition, the survey shows that 35% of consumers are shopping less often since the start of the year.

Around 28% have postponed redecorating at home; a quarter have bought more secondhand goods; and 24% have stayed-in to watch DVDs rather then make a trip to the cinema.

Consumers are also becoming gloomier about future prospects: 60% of homeowners believe they will be worse off in a year's time; older people and lower-paid respondents are the gloomiest of all.

Data sourced from The Times (UK); additional content by WARC staff