PwC Reveals UK Spend Forecast For Festive Gifts And Celebrations

• 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.

A growing number of consumers who plan to spend less are attributing it to fewer gifts to buy (rising from 15% to 20%) and seeing fewer people (increasing from 11% to 16%). This shift aligns with more households opting for a quieter Christmas at home with immediate family or going away on holiday—up from 27% in 2022 to 31% in 2024—rather than celebrating with extended family, which has declined from 73% to 69%. This change naturally reduces the need for additional gifts and spending.

Interestingly, holiday travel plans are gaining popularity, with the proportion of those planning a getaway increasing from 5% to 7%, compared with just 2% before the pandemic. That excludes those travelling abroad to visit family, which remains stable at 5%. Londoners are the most likely to be travelling abroad to see family (11%) or on holiday (14%), while the Welsh are the biggest home-birds with just 1% planning to go on holiday.

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.

There is also a growing trend of UK consumers starting their Christmas shopping earlier, with 48% saying they have already bought most of their presents before the beginning of December, compared to 43% last year. This shift is driven by a desire to stay organised (38%) and spread the cost of gifts (34%), both of which saw increases from 2023. Younger shoppers are leading this trend, with 29% of 18-24-year-olds and 24% of 25-34-year-olds shopping earlier than usual.

However, the majority of consumers still do most of their festive spending in December, with as many as 8% leaving it until the week before Christmas. Women and under 25s are the most organised, with 55% of women and 63% of under 25s claiming to have bought most of their presents by the start of December.

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. 

Lisa Hooker, Leader of Industry for Consumer Markets comments: 

“After volume declines for most non-food categories in 2024, it is good to see a relatively strong end to the year with increased spending over Black Friday, which is expected to continue over the festive period.  Despite better economic indicators and growing disposable income, consumers have been showing a level of caution across Autumn. With the Budget behind us, more certainty on taxes and a desire to make time together more special, we are cautiously optimistic about the outlook.”

“As usual the winning category is food and drink with growth in the premium ranges exceeding value ranges as customers want to selectively treat themselves and their family.  It is encouraging to see clothing and electricals increase in importance as we dress for disruption free Christmas celebrations and embrace the latest technology trends.”

Source : PwC

Image : IR_Stone / iStock / 1355828207

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