Fashion to be hardest hit as 73% of consumers to cut back retail spending over 2023
With the UK narrowly avoiding recession in 2022 and financial pressures continuing to mount, almost three quarters (73%) of UK consumers are planning to cut back on retail spending over 2023, with fashion set to be the retail category hardest hit.
According to a forecast of the year ahead by VoucherCodes in its ‘2023 Spending and Saving Report’, fashion sales will fall by 6.5% year-on-year, from £44.50bn in 2022 to £37.43bn by the end of the year, with 50% of consumers saying they plan to cut back on spending on clothing across the year.
Almost all retail categories are expected to see a drop in spend over the course of 2023, with 37% of consumers planning to cut back on health and beauty, a drop of 2% year-on-year.
While total spending on retail is expected to rise very slightly from £319.79bn in 2022 to £319.82bn in 2023, the rise is primarily due to inflation rather than an increase in sales volume.
As inflation drives prices up, consumers plan to reduce spending on non-essential items in order to prioritise their disposable income for essential payments. Little wonder then that grocery is the only category expected to see a rise in sales in 2023, up 3.3% year-on-year.
As well as fashion, 36% of consumers say they plan to spend less on sportswear over 2023, which will mean a decline of 4.4% year-on-year, while the home and garden category is forecast to see a 41% drop in spend, -2.9% year-on-year. However, perhaps surprisingly, gifts and flowers are set to see a small rise of 0.8% year-on-year.
As well as cutting back on retail spending, consumers will also be changing how they shop throughout the year to keep costs down, with the most popular change being to shop around more (39%).
Over one-third of consumers plan to look around for discount codes and coupons before making a purchase (36%), and a further quarter will wait until their chosen item is discounted (24%).
Maureen McDonagh, Managing Director and SVP International at VoucherCodes, said: “As our report shows, the remainder of 2023 is going to be tough for both retailers and consumers alike. As more of consumers’ money goes on essential payments such as bills, rent, mortgage payments, and food, almost half of consumers believe they’ll have less disposable income to spend on treats this year (48%), so retailers will need to work extra hard to encourage people to part with their hard-earned cash.
“To encourage consumers to shop, retailers should provide customers with real value and show they care about making their money go further. Any discounts should be placed front of focus, and retailers should consider offering added incentives such as loyalty points or bonus gifts. Most importantly, any marketing campaigns or promotions must be viewed with a cost-of-living lens to ensure they’re sensitive to the current climate.”