Britons ‘to spend £22.7bn on festive gifts, celebrations’ – PwC study

The news on festive season spending hasn’t exactly been good so far in the UK. But a new PwC report says there could be “a last-minute lift for retailers as UK consumers [are] set to spend £22.7 billion on festive gifts and celebrations”.

The advisory firm is predicting a 5% increase in spending for the season, spread across retail and hospitality, with consumers expecting to individually spend £433 each, prioritising premium food, new clothes and the latest tech.

Some 29% of 18-24 year-olds and 25% of 35-44 year-olds plan to spend more than last year.

The new Festive Predictions Survey said spending on gifts and celebrations this Christmas is expected to reach £22.7 billion, up from £21.6 billion last year and that £433 figure will be up from £416.

These numbers beat the rises seen over the past two years and are “comparable with the first post-pandemic festive season in 2021, when total spending hit £21.6 billion, with an average of £426 per person”. And importantly, “UK consumers have a well-established habit of spending more than they initially plan during the festive season”. 

In a PwC survey conducted in September, 18% of consumers predicted their festive spending would increase but this rose to 20% of consumers by November. Similarly, the percentage of people planning to spend less dropped sharply, from 27% in September to just 16% as the season approached. We’re told “this trend reflects growing confidence in household finances, bolstered by increased clarity following the October Budget,”. That’s an interesting conclusion given that other reports suggested there was still uncertainty over spending even after the details of the Budget became clear.

Regardless, younger consumers are powering ahead on  festive spending, as seen by the figures quoted above about the numbers who expect to spend more this time. 

But that doesn’t mean they’re the biggest spenders overall as older generations have more money available. It’s the 45-54 age group that takes the top spot as the biggest spenders, with an estimated average spend of £463 per person, “highlighting their role as the key drivers of holiday spending this year”.

So why the spending bounce in 2024? PwC said financial pressures, which heavily influenced consumer behaviour in 2022 and 2023, “have eased significantly in 2024”. Notably, the proportion of people citing “less money to spend” has dropped from 54% in 2022 to 37% in 2024, while those pointing to “negative personal finances” fell from 57% to 32%, “signalling improved confidence heading into the festive season”.

Yet while many shoppers will spend more, plenty are still reining-in their spend and interestingly, there’s a key trend that makes many of this year’s festive TV ads seem outdated. Those ads focus on huge family celebrations characterised by food, food and more food.

But “a growing number of consumers who plan to spend less are attributing it to fewer gifts to buy (rising from 15% to 20%) and seeing fewer people (increasing from 11% to 16%). This shift aligns with more households opting for a quieter Christmas at home with immediate family or going away on holiday—up from 27% in 2022 to 31% in 2024—rather than celebrating with extended family, which has declined from 73% to 69%. This change naturally reduces the need for additional gifts and spending”.

As that suggests, holiday travel plans are gaining popularity, with the proportion of those planning a getaway increasing from 5% to 7%, compared with just 2% before the pandemic. That excludes those travelling abroad to visit family, which remains stable at 5%. Londoners are the most likely to be travelling abroad to see family (11%) or on holiday (14%), while the Welsh are at the other end of the scale with just 1% planning to go on holiday.

Overall, “consumers’ net spending intentions are more positive than in 2022 and 2023 across all major spending categories, reflecting shoppers’ higher disposable incomes following the cost-of-living crisis”.

As mentioned, food and electricals will benefit. But fashion is in there too. Adult clothing is the third biggest spending priority for consumers, and the number one for the under-25s. Following a challenging year, compounded by unseasonal weather suppressing sales, PwC’s latest research “points to more consumers treating themselves to new wardrobes, which may not have been refreshed for several seasons”.

There’s also a growing trend of UK consumers starting their Christmas shopping earlier, with 48% saying they’d already bought most of their presents before the beginning of December, compared to 43% last year. This shift is driven by a desire to stay organised (38%) and spread the cost of gifts (34%), both of which saw increases from 2023. Younger shoppers are leading this trend, with 29% of 18-24 year-olds and 24% of 25-34 year-olds shopping earlier than usual.

Yet most Britons still do most of their festive spending in December, with as many as 8% leaving it until the week before Christmas. Women and under-25s are the most organised, with 55% of women and 63% of under-5s claiming to have bought most of their presents by the start of December.

As for where they shop, spending is almost evenly balanced between the physical shops and online. Shoppers say that 55% of Christmas present spending will be online for home delivery, but 10% will still entail a store visit due to them opting for click & collect, while the rest of their spend (36%) will happen in physical stores. Click & collect is most popular among younger people (15% for 25-34 year-olds) and in London (16% of spending). While older shoppers still favour in-store purchases, even those aged 65+ are buying almost half of their gifts online.