Third of UK consumers cut back on spending as uncertainty mounts
The Covid-19 pandemic has prompted a significant drop in consumer sentiment in the UK, with just 17% of Britons saying they believe the economy will rebound in the next 2-3 months.
According to a survey conducted on April 18-19 by global consulting firm McKinsey & Company, a quarter of UK consumers believe that Covid-19 will cause the economy to fall into a long-lasting recession, and as a result, are spending less on discretionary items.
Indeed, 36% of those surveyed said they have already started cutting back on spending and a further 36% said uncertainty is preventing them from making purchases they would normally make.
Additionally, one in three consumers have noticed a reduction in their income and 50% think their finances will be impacted for four months or longer.
The apparel, footwear and accessories categories are among those hardest hit by the dramatic drop in UK spending, alongside restaurants, travel and entertainment out of home.
Amid the new reality of self isolation, UK consumers are starting to shift their behaviour, spending more time connecting virtually and consuming digital and live media. According to the McKinsey report, there has been a large increase in texting, messaging and chatting online, as well as watching live news and movies.
More people are shopping online than before and there has been an increase in cooking and making home improvements.
Importantly, 94% of UK consumers believe that it will be at least another two months before personal routines can start returning to normal, and when the lockdown is lifted, Britons expect to do less shopping in physical stores, traveling and attending events than before.
The findings paint a worrying picture for already-struggling UK fashion retailers. Prime Minister Boris Johnson is under pressure to announce a plan on restarting the economy, and some lockdown restrictions could be lifted as early as mid-May but some fashion brands have already collapsed.
This week, high street brands Oasis and Warehouse revealed they will permanently close all their stores after a rescue attempt failed, and Cath Kidston is retreating from the high street following its collapse. Fashion and furniture brand Laura Ashley was the first retail casualty of the coronavirus crisis, with the loss of 721 jobs.
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