New research by PwC shows London consumers will be cautious in their spending this year as they respond to uncertainty driven by Brexit and the wider economic environment. The findings in PwC’s 2019 Retail Outlook indicate a period of continued slow or no growth for UK retailers, with those looking to succeed needing a strategy to steal market share.
More than 2,000 UK consumers were surveyed by PwC about their spending habits for the year ahead. When asked about Brexit, views were divided with over half (60%) of consumers nationwide saying it has not, and will not, affect the amount they will spend for the year ahead.
Londoners emerge as the most concerned, with 41% saying they have already changed their spending habits, and a further 14% saying they will do in 2019. In contrast, less than a quarter (24%) of respondents from the North East changed their spending habits in 2018 and only 6% plan to do so this year. This is notable given that London tends to be the most optimistic region about the national economic outlook*.
Comparing consumers inside and outside London reveals some differences in what people plan to prioritise spending money on over the next year. For example, people outside London only plan to spend more on groceries, whereas Londoners plan to spend more on their home, health, children and babies, as well as groceries.
Both those inside and outside of London plan to spend less on going out, eating out and ‘big ticket purchases,’ but those outside of London also intend to reduce spending on children and babies, holidays, health, home, beauty, clothing and technology.
Lisa Hooker, head of consumer markets at PwC, said: “When speaking to consumers in recent years, they’ve consistently told us their main priorities for increased spending are groceries and holidays. This year, these categories remain important but we are seeing subtle changes for the younger generation who are prioritising spending money on their homes, health and beauty.
“What is consistent across the board is that consumers are looking to get more for their money, with almost a third saying they will shop around more and buy more items on promotion. Pressure on consumer spending will impact the little luxuries – such as eating out – with just over a third of people saying they plan to stay in and cook at home more.”
Outlook for retailers
In response to signals from the economy, UK retailers are having to adjust to the ‘new normal’ of a subdued trading environment, meaning the only way to achieve growth is by taking market share away from other players and adapting to the more conscientious shopper.
Lisa Hooker, head of consumer markets at PwC, added:
“Continued uncertainty relating to Brexit, combined with the global economic outlook, means we expect 2019 to be relatively flat in terms of growth for the UK retail sector. In this subdued trading environment where the cake is staying the same size, retailers will need to eat into someone else’s slice.
“Retailers need to adapt to emerging trends such as the conscientious and better connected consumer and selectively embed technology in the “moments that matter” for their customer, such as investing in AI and data analytics to provide an increasingly personalised service.”