Millennials and Gen Z to spread the cost of the holiday season

As the festive season looms, savvy Millennials and Gen Z are proactively navigating Christmas spending, according to a survey by RSM UK. The study, involving 1,000 consumers, reveals that 55 percent of Millennials and 52 percent of Gen Z plan to commence their Christmas shopping earlier to efficiently manage expenses and capitalize on promotional opportunities during the Golden Quarter.

Gen Z is expected to exhibit conservative spending, averaging 446 pounds, closely trailed by Millennials at 449 pounds. The strategic decision to start early aligns with leveraging Black Friday and Cyber Monday deals, effectively curbing overall expenditures.

Despite a seemingly stagnant average Christmas spend at 467 pounds, compared to 463 pounds last year, a 6.7 percent inflation rate signals reduced 'real' budgets at 438 pounds. Notably, over a third of Gen Z (36 percent) and Millennials (31 percent) intend to utilize various credit methods, including credit cards, buy now, pay later arrangements, overdrafts, and loans, to fund their Christmas spending. This suggests that while younger consumers remain undeterred by high-interest rates, some resort to borrowing due to stretched finances.

Jacqui Baker, Head of Retail at RSM UK, remarked, "Savvy shoppers, particularly younger consumers, plan to hit the high street early to bag a bargain – spreading, and reducing, the cost of Christmas, whilst avoiding any potential delivery and stock issues that we saw last year."

Shopping with reduced budgets

The survey also pinpointed areas where consumers plan to curtail Christmas spending, with 46 percent cutting back on homeware, 42 percent on clothing, and 41 percent on socializing. However, consumers express willingness to allocate more budget to Christmas dinner (25 percent), food and drink at home (24 percent), and gifts (23 percent).

"Despite sentiment improving slightly, consumers are still having to make considered purchases, whilst cutting back in other areas," Ms Baker said. Robyn Duffy, Consumer Markets Senior Analyst at RSM UK, added that the prospects for this year's Golden Quarter remain uncertain due to inflation and a decline in consumer confidence. Retailers are anticipated to concentrate on maximizing full-price sales through strategic, brief, and impactful sales events during this pivotal trading period.