Research highlights the scale of consumer spending cut plans for 2023

KPMG asks 3000 consumers about 2023 spending intentions

KPMG asks 3000 consumers about 2023 spending intentions

Article Posted date 29 December 2022
8 min read
  • 61% of consumers plan to cut discretionary spend in 2023.
  • Only 4% of consumers said they will be able to increase their spending in 2023.
  • 43% of consumers with savings are using them to help meet essential costs.
  • Average savings balance of consumers polled is £7371, with London the region with the lowest savings average, at £4725.
  • Eating Out is the most common cost-cutting target.
  • A third of consumers plan to buy more own brand & value produce in 2023, whilst a third will buy fewer items.

Two-thirds of consumers plan to reduce their non-essential spending in 2023, according to research released today by KPMG.

KPMG surveyed 3000 consumers from across the UK at the beginning of this month (December) about their spending and saving plans for the coming year.

Two-thirds (61%) said that they will have to cut back on non-essential spending in 2023.

Essential costs (food, energy, fuel, mortgage or rent) already being too high, and a concern about how high they still may yet go, were the two most common deterrents to being able to spend more on non-essential goods and services. 

One in ten consumers highlighted concern about energy bills after April, whilst consumers also cited fixed-term mortgage deals coming to an end, and variable mortgage rates rising, as their barriers to spending.

Only 4% of consumers said they will be able to increase their non-essential spending levels in 2023. Whilst a quarter of consumers said their spend would stay at the same level as it was in 2022. 

People looking to save money most commonly (46%) plan to do so by reducing their spend on eating out, followed by clothing (42%), and takeaways (42%).  Pet products was the least selected (13%), followed by children’s clothing and toys (15%).

Commenting on the findings, Linda Ellett, UK Head of Consumer Markets, Retail and Leisure, KPMG, said: “Current essential costs, fears of how high they’ll rise – including concerns about mortgage rate and energy price changes next year – are all factors in why two-thirds of consumers that we surveyed said they have to reduce their non-essential spending in 2023. 

“To do so, consumers are increasingly changing how they shop to save money – including switching to cheaper retailers, buying more value or promotional produce, and swapping eating out for meals in.  Understanding these swaps is critical for brands and retailers looking to still be the first choice for spend.”

Around one in ten (13%) consumers polled by KPMG have no savings.  Amongst the remainder that have, the average savings balance is £7371 heading into 2023.  London was the region with the lowest savings average, at £4725.

Of all the consumers with savings, 43% say they are using them to help meet their essential costs.  This rises to over 80% amongst some low income household groups that KPMG polled.

In 2023, on average, consumers with savings said they would spend 18% of their balance on non-essential goods or services.  Only 8% said they would spend over half of their total.

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Linda Ellett
Head of Consumer, Leisure & Retail
KPMG in the UK
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Holiday(s) was the most common plan for non-essential spending using savings (for 30%), followed by home improvements and home appliances.

Linda Ellett added: “Savings are now being used to help meet essential costs by nearly half of the consumers we surveyed, which provides a cushion, but these savings are finite and so the longer the current economic environment continues the more worrying it becomes.

“Ability and appetite to spend on big ticket items is limited in this climate, but spending plans do remain for holidays, home improvements and appliances.  And we know consumers do like to treat themselves and others, so smart retailers and brands can still hold revenues if not volumes if they are targeted in their consumer appeal.  But should the scale of non-essential cuts outlined in our research come to fruition, then it likely won’t be enough to stop scarring on both the high street and online in 2023.”

Consumers list ‘price’ as the top purchasing consideration when shopping in 2023, as well as the most common reason that they choose a retailer.

  • A third of consumers (28%) say they will shop more at less expensive retailers in 2023, whilst 33% say they will buy more own brand and value goods.  30% say they will buy fewer items.
  • One in five (19%) will buy more premium home cook meals instead of eating out - which is the most common non-essential spend cost-cutting target.
  • One in ten (12%) consumers say they will use credit more next year when shopping.

ENDS

 

Media contact and for interview with Linda Ellett:

Steven Reilly-Hii, Media Relations Manager, KPMG UK, steven.reilly-hii@kpmg.co.uk , 07510 376635.

Full questions and answers:

Questions posed to 3000 UK consumers between 1st December and 7th December 2022, by One Poll, for KPMG UK.  Question sample base is all 3000 consumers, unless said otherwise.

Heading into 2023, how financially secure do you feel compared to when 2022 began?

  • 15% Much more secure              
  • 23% Slightly more secure
  • 29% No more or less secure
  • 18% Slightly less secure
  • 11% Much less secure
  • 3% Prefer not to say

How will the cost of your essential bills (eg. food, energy, fuel, mortgage/rent) affect your spending in 2023?

  • 4% I will be able to increase my non-essential spending
  • 61% I will have to cut back on my non-essential spending
  • 25% My non-essential spending levels will remain the same
  • 9% Not sure

Which of the following non-essential spends will you cut back on in 2023? (select all that apply)

Sample size: 1832 (all of the consumers who said they will cut their non-essential spending in 2023)

  • 46% Eating out
  • 42% Clothing
  • 42% Takeaways
  • 35% Experiences (cinema, theatre, for example)
  • 34% Travel/Holiday (lower price, or delaying, for example)
  • 31% Food and drink shopping
  • 29% Beauty products & services (make up, manicures, for example)
  • 29% Home improvements (products and services)
  • 26% Media subscriptions (TV, magazines, newspapers, for example)
  • 25% Vehicle / transport usage
  • 22% Technology
  • 18% Fitness (gym, sports clubs, for example)
  • 16% Meal delivery kits
  • 15% Children’s clothing & toys
  • 13% Pet products
  • 1% None of the above

Which of the following will do you expect you will spend more on in 2023? (select all that apply)

Sample size: 124 (all of the consumers who said they will increase their non-essential spending in 2023).

  • 32% Travel/Holiday (lower price, or delaying, for example)
  • 29% Food and drink shopping
  • 23% Home improvements (products and services)
  • 22% Beauty products & services (make up, manicures, for example)
  • 21% Vehicle / transport usage
  • 20% Clothing
  • 20% Media subscriptions (TV, magazines, newspapers, for example)
  • 18% Fitness (gym, sports clubs, for example)
  • 17% Technology
  • 15% Pet products
  • 14% Experiences (cinema, theatre, for example)
  • 14% Eating out
  • 11% None of the above
  • 10% Takeaways
  • 10% Children’s clothing & toys
  • 8% Meal delivery kits

Which of the following steps do you think you will do more of in 2023 when shopping? (select all that apply)

  • 33% Buy more own brand / value products
  • 33% Buy more products on promotion or discount
  • 30% Spend more time looking for bargains
  • 30% Buy fewer items
  • 28% Buy different brands to avoid paying higher cost
  • 28% Shop at less expensive retailers
  • 26% Shop at multiple stores to find bargains
  • 23% Stock up on items in case prices rise
  • 19% Swap eating out for premium home cook meals
  • 19% Buy more pre-owned items
  • 18% Buy wholesale/bulk
  • 18% Sign up to retailer loyalty schemes
  • 12% Spend more on credit
  • 11% None of the above

Which of the following steps have you already taken when shopping in the past 12 months? (select all that apply)

  • 31% Buy more own brand / value products
  • 30% Buy more products on promotion or discount
  • 28% Spend more time looking for bargains
  • 27% Shop at less expensive retailers
  • 26% Buy different brands to avoid paying higher cost
  • 26% Buy fewer items
  • 24% Shop at multiple stores to find bargains
  • 20% Stock up on items in case prices rise
  • 18% Sign up to retailer loyalty schemes
  • 17% Buy wholesale/bulk
  • 17% Swap eating out for premium home cook meals
  • 16% Buy more pre-owned items
  • 13% Spend more on credit
  • 10% None of the above

Roughly, how much in savings do you think you will start 2023 with? (Please select best match)

  • 5% £1-250
  • 9% £251-500
  • 11% £501-1000
  • 13% £1000-2500
  • 11% £2501-5000
  • 9% £5000-7500
  • 6% £7501-£10000
  • 4% £10001-15000
  • 6% £15001-20000
  • 14% £20001+
  • 13% N/A – don’t have savings

Average = £7371

What % of those savings do you think you will spend in 2023 on the things that you want? (i.e. not your essential costs such as food, fuel or rent/mortgage). Sample size: 2611 (all of those with savings).

  • 32%: ‘1-10%’
  • 29%: ‘11-25%’
  • 14%: ’26-50%’
  • 5%: ’51-75%’
  • 3%: ’76-100%’
  • 17%: None

Average = 18%

If you plan on spending savings in 2023, what will you spend them on ‘big ticket’ purchases? (select all that apply). Sample size: 2611 (all of those with savings).

  • 30% Holiday(s)
  • 29% Home improvements
  • 25% Home appliances
  • 21% Home electronics
  • 21% A home
  • 20% A vehicle
  • 19% New technology (such as a mobile)
  • 3% None of the above
  • 20% I don’t plan to spend my savings on big ticket items

Are you currently having to use your savings to offset your essential household costs? (eg. food, energy, fuel, mortgage/rent)

  • 43% Yes
  • 57% No

What factor is your biggest deterrent to spending more of either your income or savings on non-essential goods and services in 2023? Select one

  • 30% Essential costs already too high
  • 19% In case essential costs go up further
  • 10% Concern about energy bill cost after April
  • 8% Fixed term mortgage ends this year
  • 7% Variable rate mortgage is rising
  • 7% Saving money for the future
  • 3% Concern about possible rent increase
  • 2% Job insecurity
  • 14% None of the above/ nothing in particular

What will be your top considerations when purchasing goods and services in 2023? (Select up to three)

  • 66% Price
  • 60% Quality
  • 34% Sustainability
  • 29% Convenience
  • 19% Loyalty benefits (such as discount/promotions)
  • 14% Customer experience
  • 6% Ethics
  • 5% Other considerations
  • 4% Data privacy

About KPMG:

KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 15,300 partners and staff. The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021. KPMG is a global organization of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.