Consumer worries over price increases dominate the Christmas shopping season, according to the latest KPMG Next Gen Retail survey. The survey also found low levels of trust in sustainability and environmental claims by brands, suggesting that ‘greenwashing’ is impacting customer buying decisions. As cost becomes the central issue, online shopping is also seeing a resurgence, particularly among younger cohorts after a drop earlier this year as COVID restrictions eased.
Price is the number one issue this Christmas … as customers are faced with smaller disposable incomes and higher prices
Consumer worries over price increases
Products across most categories are perceived to have increased in price by a vast majority of consumers, notably food/groceries and utilities (94% each). Respondents who had previously (May 2022) cited reducing expenditure on discretionary spend such as dining out, are now looking at cutting back on necessities such as groceries, according to the KPMG survey.
Over 7 in 10 (76%) believe Christmas shopping will be more expensive this holiday season, naming limited disposable income and inflation as stress factors and almost two-thirds (62%) say they will reduce their spending over this Christmas due to having less disposable income.
This could be a cause for concern for main street retail outlets and hospitality as almost half of people (47%) say they will shop online more to find better deals this Christmas and 6 in 10 (62%) plan to reduce their spent in restaurants and pubs compared to last year. Only slightly more than 1 in 10 (13%) plan to use a loan or credit facility to fund their Christmas shopping as interest rates increase across the Eurozone.
However, the survey found that older cohorts (those in the 55-64, and the 65+ categories) expect to spend more on Christmas shopping compared to younger consumers (those in the 18-24, 25-34 and 35-44 categories), who are more likely to have less disposable income and be more stressed due to inflation.
Only 2 in 10 (21%) have had difficulty finding certain items, despite warnings of decreased or limited stock because of global supply chain issues. However, 4 in 10 (39%) stated that they will begin their Christmas shop early out of concern of stock shortages.
Customers not buying brands’ sustainability and environmental claims
The KPMG survey found that consumers have a very low level of trust (26%) in the environmental and sustainability claims made by brands. Almost two-thirds (63%) agreed that “brands talk about doing positive things for the environment, but this does not always reflect the reality of their products”.
Nonetheless, only a modest number are actively searching for eco-friendly products (27%) or are willing to pay more for these (28%). Notably, mid-aged cohorts place a higher importance on sustainability when it comes to products like children’s toys, whilst younger and older consumers do so for cleaning products and food/groceries. Notably, the sustainability credentials of alcoholic drinks were of the least importance to consumers across age groups.
Online shopping makes a comeback as price becomes central
After seeing a drop in online shopping growth once COVID-19 restrictions were lifted in early 2022, consumers are again opting to buy clothes (28%) and gifts (26%) online more often. Growth in online shopping for these two categories is notably driven by younger consumers (49% and 33%, respectively). As a result, expectations are that consumers will return to buying more products online in the next 12 months (29%), with less people saying they expect to buy more in-store than when asked in May of this year.
Consumers are increasingly turning to online shopping as they believe they can find cheaper products than when in-store (53%), though older cohorts still prefer going to physical stores so they can see and touch products (76%). There is, however, a growing preference for shopping locally, rather than at city/shopping centres (54%).
Targeted ads ‘irrelevant’
But few put off by online data collection
Few Irish consumers find targeted ads they see online to be relevant, with only 21% stating they are shown relevant products when browsing. However, very few are concerned about how their data is collected by social media companies and other websites when shopping online, with only 21% stating that they shop online less due to being put off by how their data is collected. Notably, younger demographics are both less concerned about how their data is collected and the most likely to find products they see on social media relevant.
Revolut & money apps popular with next generation
There’s a clear preference among 18-24s towards mobile payments, such as Apple or Google Pay (37%), while those aged 25-34 prefer apps like Revolut. Younger consumers generally are the most likely to use money apps such as Revolut to shop online (80% of 18–24-year-olds compared with 54% generally). Younger cohorts are also the most likely to use ‘vault’ functions for saving money, or invest in stocks and cryptocurrencies, as opposed to traditional savings and investment options. The survey found that ‘money app’ usage declines with age generally. Older cohorts and those in more rural areas are least likely to use such apps and are still opting for card/cash payment methods.
Survey objectives & methodology
KPMG’s survey of consumer retail attitudes was conducted via RED C. Quotas were set on age, gender, social class and region to ensure a nationally representative sample of 1,000+ adults 18+. Fieldwork was carried out in November 2022, and where relevant, results are compared to previous wave of the retail survey carried out in December 2021 and May 2022.
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Keith Watt
Partner, Head of Retail & Manufacturing
KPMG in Ireland
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Sandra Farrell
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KPMG in Ireland