Ecommerce Fulfilment Services

Trends in Consumer Spending in the UK: December 2023 and January 2024

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As 2023 wrapped up and we stepped into 2024, consumer spending in the UK showed interesting shifts. With the economy and consumer habits evolving, December and January stand out for their distinct spending trends. These months are all about their peak holiday spending, showcasing how shifts in consumer priorities are reshaping the market. December, with its festive spirit, and January, with New Year resolutions and sales, often see different purchasing activities. 

The boom in online shopping is the new normal in UK consumer spending. Consumers are choosing the convenience and safety of shopping from home now more than ever. This shift isn’t just a holiday fling; it’s a sign of how our shopping habits are fundamentally changing, especially in ecommerce. For businesses, this means there’s a big opportunity to meet customers where they are by getting creative and offering an even better online experience. 

Our Findings

  • Cold weather in January 2024 encouraged more online shopping, leading to a spike in ecommerce activity.
  • Post-holiday season in 2023, there’s a noticeable turn towards financial caution and prioritising essential spending.
  • Online sales grew from December 2022 to December 2023, showing the growth of ecommerce. 
  • Non-essential spending rose in December 2023 but fell in January 2024.
  • Consumers are more likely to make retail purchases online, accounting for more than half the sales in January 2024.
  • Sale spending varies by month: Boxing Day 2023 saw a drop in in-store sales but an increase in online purchases, while January 2024 experienced no notable rise in sales.

How Do Consumer Attitudes Change from December to January?

Consumer attitudes shift from December to January, primarily influenced by the transition from holiday spending to a more budget-conscious mindset. As December rolls in, wallets open up, and shopping lists grow, thanks to the festive cheer surrounding holiday gift-giving, decorations, and merry-making. 

This time of year, consumers are all about splurging a little (or a lot) on both the must-haves and the nice-to-haves, riding the wave of holiday sales and that irresistible festive mood. Retailers often report significant sales increases during this time, offering tempting early discounts and promotions to encourage consumer spending. For example, the Barclays Consumer Spend report indicated a modest year-on-year increase in consumer card spending by 2.3% in December 2023, despite overall retail sector struggles to maintain momentum.

However, as January arrives, the focus shifts towards financial caution. After the indulgence of the holiday season, consumers become more concerned about their finances from the aftermath of holiday spending, as everyone starts to reassess their financial health in the cold light of January. This change is further exacerbated by factors such as the January energy price cap rise, leading to increased worry among 87% of Britons about the impact on their finances. 

Regardless of these concerns, there’s an uptick in consumer confidence regarding household finances, with 67% expressing optimism, the highest level since August 2023. This mix of financial caution and confidence over concerns over spending and bills highlights a complex relationship between consumer attitudes and economic realities.

Consumer Spending December 2023

In December, consumer spending in the UK undergoes a remarkable transformation, driven by the Christmas season. This period is characterised by a surge in discretionary spending to celebrate.

Consumer Trends 

Traditionally, this month records higher retail sales in stores and online, but recent years have seen a shift towards ecommerce spending. Online sales increased from 25.4% in December 2022 to 27.1% in December 2023. The convenience of online shopping, coupled with the desire to avoid crowded places, has increased digital transactions. This spike in seasonal spending shows that shoppers really value convenience, and it’s a big chance for those who run both brick-and-mortar and online businesses to grab their attention with innovative online experiences.

Barclays Market and Customer Insights reported that the UK retail sector saw a slowdown in December 2023, failing to continue the momentum gained in November despite all the early holiday discounts. Consumer card spending slightly increased by 2.3% year-on-year in December. However, specific sectors like clothing declined by 2%. This downturn was due to consumers making early festive purchases in November, which decreased spending in December.

Essential vs Non-Essential Spending 

Although essential item spending growth slowed to 1.8% in December, down from November’s 3.3% increase, non-essential spending rose by 2.5%, as we’d expect. It’s no shocker that retail categories saw the most growth during this biggest month of the holiday season. 

Compared to September, an additional three million people shopped for items in key holiday categories like greeting cards, sweets, games and toys, and groceries. This spike reflects the seasonal rush to buy gifts and festive treats. The slowdown in essential spending but the rise in non-essential purchases highlights consumer priorities during the holiday season. Ecommerce businesses can capitalise on this trend by focusing on non-essential, gift-oriented categories and tailoring their marketing strategies to emphasise holiday essentials and gift ideas.

Online Spending 

Online spending dropped by 1.7% from November to December 2023, with falls across all sectors apart from non-store retailing, which has stayed the same. This trend could come from households planning their holiday spending more strategically, spreading their purchases across several paychecks to manage their budgets more effectively and avoid the financial strain of covering all holiday expenses at once.

For online and retail shops, understanding why shoppers change their tune and rolling out early deals and longer promos can catch their spending spree before the big rush.

Shipping 

The shipping sector experienced a significant boost thanks to the surge in Christmas orders and deliveries. An extra four million transactions were recorded, with Royal Mail and Evri leading the charge. Royal Mail saw a staggering 38% increase in activity, reaching 17.9 million transactions, while Evri’s transactions jumped by 32% to 14.3 million. 

This growth shows just how important shipping services are in making sure all those holiday gifts and goodies get where they’re going just in time for the celebrations. Mixing up shipping strategies, like outsourcing order fulfilment from a third-party logistics provider, can give online platforms a big advantage. It eases their workload and can lead to faster deliveries and lower costs, keeping both customers and businesses happy. 

Boxing Day

Specifically, in-store retail spending fell by 10.9% on Boxing Day compared to the previous year, partly because many major stores decided to remain shut. However, this decrease was nearly balanced out by a 10.7% increase in online retail spending that day. Non-grocery retail sectors like consumer electronics, fashion and beauty and home and garden all experienced an audience boost. 

A big jump in online shopping spending shows a chance for online stores to boost their sales, even on days that aren’t usually big hitters.

Consumer Spending January 2024

In January, following the December spending surge, UK consumer behaviour takes a different turn. After the festive excesses, January is often seen as a time for budgeting and looking for deals, especially during the New Year sales. Retailers, both online and in physical stores, offer significant discounts, leading to a spike in purchases, albeit with a more value-driven focus than December’s gift-oriented spending.

This month marks a shift towards practical purchases and investments in items considered too expensive before the sales. Ecommerce continues to play a role, with consumers seeking out the best deals from the comfort of their homes. This period of recalibration in spending habits reflects a broader trend of savvy shopping as consumers reset for the new year with an eye on savings and essential spending.

Consumer Trends

According to the Barclays UK consumer spending report, consumer card spending grew by 3.1% compared to 2.3% in December 2023, highlighting the increase in essential spending post-Christmas. Consumers tend to pull back on non-essential spending, saving more after the holiday season’s expenses.

The traditional January sales in the UK didn’t significantly boost consumer spending in 2024, as households remained cautious due to the ongoing cost of living crisis. Retailers reported a slowdown in sales growth, with total sales in January rising only 1.2% year-on-year, below the annual average growth rate. This small bump in sales was more about prices going up than actually selling more goods.

Seeing a little boost in spending from January sales indicates that discounts alone might not encourage more buying during tough economic times. For ecommerce and retail businesses, highlighting the quality and longevity of products or providing flexible payment options are more effective strategies to encourage sales.

Weather

The chillier weather plays a role, too, leading many to prefer staying indoors. This shift also resulted in an increase in online retail in January. The cold weather led to more people checking out the post-holiday sales from their homes, avoiding the high street. This presents an opportunity for ecommerce businesses to capture more sales. Ensuring a smooth online shopping experience, providing efficient delivery options, and leveraging digital marketing to reach consumers at home can help companies take advantage of this shift in shopping behaviour.

Retail Sector 

The retail sector got mixed analyses; the BRC mentioned that warmer periods in January reduced spending on winter clothing, whereas Barclays thought it was due to shopping in the cold weather. Meanwhile, business activity in the UK’s services sector grew, suggesting some economic resilience.

Despite initial spending boosts from the January sales, demand for larger items like furniture and electronics stayed weak, showing how rising living costs are still hitting hard. This follows a disappointing December for retailers, with a notable decline in sales during the holiday season. Offering flexible payment options on more expensive items or adjusting inventory in these industries can help businesses with their overheads.

Consumer card spending showed a slight increase, but it remained below the current inflation rate. However, there were signs of resilience in consumer confidence, with increased spending on digital content, takeaway meals, and groceries. This could indicate a shift towards saving money by staying in.

Additionally, in January 2024, online shopping for retail items, excluding groceries, accounted for 57.6% of all purchases in this category. This is the most significant proportion of online spending seen since February 2022, reaching 58.0%.

Boost Consumer Confidence with Delta Fulfilment

As shopping habits change and ecommerce becomes increasingly important, businesses need to adapt to keep pace. Partnering with an ecommerce logistics provider like us at Delta Fulfilment could be just what your online business needs to navigate these changes. 

We’re here to streamline your shipping process, making your deliveries quick and reliable, which will keep your customers satisfied and loyal. If you’re ready to turn these shifts in consumer behaviour into opportunities for growth, contact us today

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