A last minute lift for retailers as UK consumers set to spend £22.7bn on festive gifts and celebrations
- A predicted 5% increase in UK spending for the festive season would provide a boost for retailers and hospitality operators
- Consumers expecting to individually spend £433 each, prioritising premium food, new outfits and the latest tech
- 29% of 18-24-year-olds and 25% of 35-44-year-olds plan to spend more than last year
According to PwC’s latest Festive Predictions Survey, spending on gifts and celebrations this Christmas is expected to reach £22.7 billion, marking a 5% increase from £21.6 billion last year. Average spending per consumer is projected to rise from £416 to £433. These figures surpass the levels seen over the past two years and are comparable with the first post-pandemic festive season in 2021, when total spending hit £21.6 billion, with an average of £426 per person.
UK consumers have a well-established habit of spending more than they initially plan during the festive season. In a PwC survey conducted in September, 18% of consumers predicted their festive spending would increase. This rose to 20% of consumers by November. Similarly, the percentage of people planning to spend less dropped sharply, from 27% in September to just 16% as the season approached. This trend reflects growing confidence in household finances, bolstered by increased clarity following the October Budget.
Younger consumers are leading the charge in festive spending, with 29% of 18-24-year-olds planning to spend more than last year, followed closely by 25% of those aged 35-44. However, it’s the 45-54 age group that takes the top spot as the biggest spenders, with an estimated average spend of £463 per person, highlighting their role as the key drivers of holiday spending this year.
The research highlights the reasons behind the rebound in Christmas spending after three challenging years. Financial pressures, which heavily influenced consumer behavior in 2022 and 2023, have eased significantly in 2024. Notably, the proportion of people citing “less money to spend” has dropped from 54% in 2022 to 37% in 2024, while those pointing to “negative personal finances” decreased from 57% to 32%, signaling improved confidence heading into the festive season.
Will retailers enjoy a successful end of year?
Despite only a modest increase in planned outlay over the festive period, consumers’ net spending intentions are more positive than in 2022 and 2023 across all major spending categories, reflecting shoppers’ higher disposable incomes following the cost-of-living crisis. The biggest festive winners are expected to include:
- Supermarkets – food and drink is a top spending priority for most and particularly for those over 45. With food inflation falling below 2%, this suggests that consumers will be both buying more and trading up to premium and extra special products to treat themselves over the festive period.
- Fashion – adult clothing is the third biggest spending priority for consumers, and the number one for under 25s. Following a challenging year, compounded by unseasonal weather suppressing sales, PwC’s latest research points to more consumers treating themselves to new wardrobes which may not have been refreshed for several seasons.
- Electricals and technology – this category has jumped from ninth to fifth most important for consumers in 2024 (after food, Christmas dinner, fashion and stocking fillers), and is the top spending category for 35-44 year olds. This reflects a more exciting new product release pipeline in gaming and wearable technology, and follows a stronger performance over the Black Friday period.
Spending will be evenly balanced between the physical shops and online. Shoppers say that 55% of Christmas present spending will be online for home delivery, with 10% click and collect and the rest bought in physical stores (36%). Click and collect is most popular amongst younger people (15% for 25-34 year olds) and in London (16% of spending). While older shoppers still favour in-store purchases, even those aged 65+ are buying almost half of their gifts online.
