Research shows scale of cutbacks in non-essential spending so far in 2023

KPMG Consumer Pulse survey finds:

• 55% of consumers say they have reduced their non-essential spend so far in 2023.  Most commonly on eating out (63%).
• Half of consumers say they will spend less on non-essentials if not eligible for energy bills support 
• A third of consumers say they will use savings to help with energy costs if not eligible for energy bills support from April. 
• 38% of consumers say utilities costs are the biggest deterrent to spending more of their income or savings on non-essential goods or services in the next three months.
• Half of consumers say they face mobile phone plan increases, and broadband plan increases, respectively.
• A third of consumers say they are buying from cheaper retailers so far this year – while 37% of consumers say they have been purchasing more own brand and value produce.
• One in 10 consumers say they are using credit more so far in 2023.

New research released today from KPMG UK highlights the scale of reduction in consumer spending so far in 2023 and indicates how households may respond if they no longer receive energy bill support payments from April.

The Government’s Energy Bills Support Scheme provided a monthly discount of around £67 from October through to March 2023, but support will now move to being means tested.

Half of consumers surveyed by KPMG as part of its Consumer Pulse survey said they would cut non-essential spend, while a third would use savings to help meet energy costs, should they no longer receive bills support payments.

The same proportion of consumers said they would have also taken the same actions – had the Government not extended the energy price guarantee from April.

So far in 2023, 55% of consumers have reduced their non-essential spending, with the cost of utilities bills cited as being their biggest barrier to spending more income or savings on discretionary items in the next three months.

Half of respondents also reported their mobile phone plan was increasing in cost from April, while half also said that their broadband plan price was rising.  Only one in 10 said that their price plans for either weren’t increasing.

Linda Ellett, UK Head of Consumer Markets, Retail and Leisure for KPMG, said:

“With energy, mobile, and broadband costs set to rise for many households from April, a number of consumers will likely have to further cut back their discretionary spending.  Already in 2023, over half of the consumers that we spoke with have reduced their non-essential spend.  Buying behaviour also continues to change as shoppers look to lower costs – including switching to discounters, buying more own brand and value produce, and searching out promotional prices.”

When asked about their buying behaviour when shopping so far this year, the 3,000 consumers surveyed said they were:

• Buying more own brand/value: 37%
• Buying more promotion/discount items: 36%
• Spending more time looking for bargains: 33%
• Buying fewer items: 33%
• Switching brands: 31%
• Switching to cheaper retailers: 29%
• Buying from multiple stores: 29%
• Spending more on credit: 11%

A third of consumers surveyed reported using their savings to help meet their essential costs.  Two thirds with savings say they don’t currently need to use savings for this.  The average amount of savings in the bank among the group was £7,744.

Among those with savings, 41% are yet to purchase any big ticket items so far this year – with 34% saying they won’t do so in the rest of 2023 either.  Among those who have spent savings on major purchases so far this year, home improvements were the most common spend (for 22% of people).  Home improvements is also the most common savings spending intention for the rest of the year (for a third of people), followed by a holiday (for a quarter). 

Linda Ellett added:

“With so many households squeezed by higher prices, a third of consumers with savings are using them to help meet their essential costs, while 40% didn’t make any major purchases using savings so far in 2023.  Appetite for major purchase spending does still exist for the rest of the year though amongst two-thirds of consumers with savings.  But unlocking that spend will be dependent on whether and when essential costs stop rising.”

Overall feeling of financial security so far in 2023 is largely balanced among consumers – with 25% feeling more secure than when the year began, 29% feeling less secure, and 45% feeling the same as they did when the year began.

ENDS

Media contact:

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

Consumer Pulse survey questions posed to 3,000 UK consumers (unless stated otherwise) between March 6 and 10 2023, by One Poll, for KPMG UK:

Do you feel more or less financially secure today, than you did at the beginning of January this year? 

• Much more secure:                       7%                      
• Slightly more secure:                    18%
• No more or less secure:               45%
• Slightly less secure:                       17%
• Much less secure:                         12%
• Prefer not to say:                          1%

Since the start of the year, due to the cost of your essential bills (eg. food, energy, fuel, mortgage/rent), have you: 

• I had to reduce non-essential spending                                             55%
• My non-essential spending levels remain the same as in 2022       37%
• I have been able to increase my non-essential spending                3%
• Not sure                                                                                                   5%

1641 Consumers: What non-essential spend(s) have you cut back on so far this year? [Select all that apply]

• Eating out                                       63%      
• Takeaways                                      55%
• Clothing                                           54%      
• Experiences                                    45%
• Food and drink shopping             39%
• Travel/Holiday                               37%
• Home improvements                    32%
• Beauty products & services         31%
• Media subscriptions                     26%
• Vehicle / transport usage            25%
• Technology                                     20%
• Fitness                                             17%
• Meal delivery kits                          15%
• Pet products                                  12%
• Children’s clothing & toys            11%
• Other                                               1%

So far in 2023, which of the following actions are you doing when shopping? [Select all that apply]

• Buying more own brand / value products                           37%
• Buying more products on promotion or discount              36%
• Spending more time looking for bargains                           33%
• Buying fewer items                                                                 33%
• Buying different brands to avoid paying higher cost          31%
• Shopping at less expensive retailers                                     29%
• Shopping at multiple stores to find bargains                      29%
• Stocking up on items in case prices rise                               21%
• Signed-up to retailer loyalty schemes                                  17%
• Swapping eating out for premium home cook meals        16%
• Buying wholesale/bulk                                                            16%
• Buying more pre-owned items                                              15%
• Buying more sustainable or ethical produce                       13%
• Spending more on credit                                                         11%
• None of the above                                                                   11%

Which of the following price plans are increasing in cost at the end of March/start of April for you? [Select all that apply]

• Broadband                                                                  51%
• Mobile                                                                         49%
• Not sure                                                                      21%
• None of the above                                                     11%
• N/A – I don’t have a mobile or broadband plan    2%

Approximately how much money do you have in savings at the moment? [Please select best match]  Average: £7,744

2745 Consumers: Are you currently having to use your savings to help meet your essential household costs? (eg. food, energy, fuel, mortgage/rent)

• Yes        34%
• No         66%

So far this year, have you spent your savings on any of the following ‘big ticket’ purchase? [Select all that apply] 

• Home improvements     22%
• Holiday(s)                         17%
• Home appliances            16%
• Home electronics            14%
• A vehicle                           12%
• Holiday(s)                         17%
• New technology              7%
• A new home                    7%
• None of the above          14%
• N/A- I haven’t spent my savings on big ticket items          41%

In the rest of 2023, do you plan on spending savings on any of the following ‘big ticket’ purchases? [Select all that apply]

• Home improvements     28%
• Holiday(s)                         26%
• Home appliances            17%
• Home electronics            13%
• A vehicle                           12%
• A new home                    10%
• New technology              7%
• None of the above          8%
• N/A- I don’t plan to spend my savings on big ticket items                            34%

What is your biggest deterrent to spending more of either your income or savings on non-essential goods and services in the next three months? [Select one]

• Utilities (gas, electricity, water) costs.                                                38%
• Food and drink cost.                                                                              8%
• Current mortgage cost.                                                                          7%
• Higher mortgage cost this year when fixed term deal ends.            7%
• Concern about further variable rate mortgage increases.                5%
• Current rent cost.                                                                                   5%
• Concern about further rent increases.                                                3%             
• Transport/vehicle cost.                                                                          2%
• Childcare cost.                                                                                         1%
• None of the above / nothing in particular.                                        23%

What are your top considerations when purchasing goods and services in 2023? [Select up to three]

• Price                                  79%
• Quality                              69%
• Sustainability                   30%
• Convenience                    24%
• Loyalty benefits               20%      
• Customer experience      10%
• Ethics                                 4%        
• Data privacy                      2%
• Other considerations        1%

Which of the below best describes you? 

• I am solely responsible for energy bills in my household               54%
• I am partially responsible for energy bills in my household           39%
• I am not responsible for energy bills in my household                    6%

CONTEXT: All eligible households benefited from Government support with their energy bills over this winter.  The Government’s Energy Price Guarantee capped average household bills at £2,500 per annum, whilst energy support payments (a discount of £66/ £67 applied to energy bills from October through to March 2023) were also provided.

2808 Consumers: If the energy price cap is increased from April 1 will you do any of the following? [Select all that apply]

• Spend less on non-essentials                                  49%
• Keep my non-essential spend the same                28%
• Use savings to help pay for energy costs               27%
• Keep my use of savings the same                           13%
• Not sure/ none of the above                                   18%

2808 Consumers: If you no longer receive the energy support payments from April 1 will you do any of the following? [Select all that apply]

• Spend less on non-essentials                                   49%
• Use savings to help pay for energy costs               30%
• Keep my non-essential spend the same                25%
• Keep my use of savings the same                           12%
• Not sure/ none of the above                                   17%

 

About KPMG UK:

KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 17,000 partners and staff. The UK firm recorded a revenue of £2.72 billion in the year ended 30 September 2022.  

KPMG is a global organization of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 143 countries and territories with more than 265,000 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.