Britons plan to go into debt to afford Christmas, BNPL key for younger consumers
Although reports have already told us UK consumers and planning to spend less this Christmas, many are still willing to go into debt to afford the season’s celebrations, with low-income families most at risk.
Some 77% of lower-income consumers (earning under £22,000 a year) are worried they won’t be able to purchase the items they want this Christmas, according to Survey Monkey reseach for Momentive.
With the cost-of-living crisis projected to worsen by December, 14% of lower-income consumers are planning to go into debt to afford their Christmas shopping, with a further 10% of those earning between £22,000 and £50,000 also planning to do the same.
Parents predict they will be particularly disadvantaged this winter, with 20% of those with children under 18 expecting to go into debt over the holiday season, compared to just 8% of non-parents. Among parents, the most popular shopping categories for gifts are clothing (63%), toys & games (56%), technology (39%) and beauty (32%).
Overall, UK retailers are set to see a significant impact on sales, with 63% of consumers planning to spend less money this holiday season compared to 2021. The rising costs of energy, food and housing are to blame for reduced consumer spending, the report confirmed.
What’s more, despite 52% of UK consumers being worried about supply chain issues, this year 27% plan to shop earlier and 18% plan to shop later due to inflation, compared to 2021.
In line with reduced spending and consumer debt, the research points to a rise in Buy Now Pay Later (BNPL) services to fund festivities. BNPL usage has doubled in the last 12 months, with 14% of UK consumers expecting to use this payment method to cover shopping for gifts and food this year.
Some 11% of Millennials and Gen Z plan to do all of their Christmas shopping using BNPL. This drops significantly with older generations, with just 1% of Boomers planning to do the same.
Jon Cohen, Chief Research Officer at Momentive, said: “The rising popularity of BNPL services alongside widespread anticipation of higher debt this Christmas points to a bleak financial situation for UK consumers. With the Christmas season soon to kick into high gear, retailers are already being stretched to maintain supply chains as consumers try to stock up ahead of soaring prices.”
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