The cost of living continues to be felt among consumers with 72% saying they expect Christmas shopping to be significantly more expensive this year, while 36% expect to spend less compared to last year.
Those are the views of respondents to the latest KPMG Next Gen Retail Survey.
“Price is still the primary factor influencing consumers when choosing where to shop, with 52% ranking it as a crucial consideration,” said Keith Watt, Head of Retail at KPMG.
“Our findings suggest that this Christmas will be marked by careful budgeting and a stronger emphasis on value, presenting retailers with challenges and opportunities to meet the needs of Irish shoppers,” he said.
“Retailers that adapt by offering compelling deals, efficient online experiences, and in-store options will be best positioned to attract the holiday spend,” he added.
The research also highlights shifting spending habits, with more than half planning to reduce their Christmas shopping budgets and 56% intending to cut back on dining out to save money. The survey revealed a sizable proportion of 18-34s (30%) plan to fund Christmas via credit facilities.
Additionally, nearly half (45%) of respondents say they will look for Black Friday and Cyber Monday deals online, while 38% plan to do so in-store. Over half (54%) expect to give smaller gifts this year due to cost of living pressures.
“Irish shoppers may be tightening their belts this Christmas, but retailers should remain cautiously optimistic,” Mr Watt said. “Recent CSO data shows retail sales (excluding car sales) the monthly volume of retail sales was up by 0.7% in September. With easing inflation, a strong labour market, and rising real incomes, there’s positive momentum for retail as the busiest time of the year approaches.”
In-store and online shopping preferences
The survey found that despite the convenience of online shopping, in-store shopping retains a strong appeal for Irish consumers who appreciate the ability to shop for items in-store.
The research reveals that six in ten of adults prefer shopping in-store to see and feel products before buying, highlighting the sustained importance of physical experiences.
This is mirrored in Europe, where European retailers are investing in physical shops to stimulate online and offline sales as they face increasing competition from giant e-commerce companies. They also want to take advantage of shoppers’ renewed interest in visiting shops.
However, online shopping continues to grow, with 53% of respondents considering it generally cheaper than in-store options. Yet, complex return processes remain a barrier, with over a quarter avoiding online shopping altogether due to return-related hassles.
As shoppers become more value-conscious amid economic pressures, the majority (87%) rate “value for money” as their top shopping priority, followed by quality at 70% and customer service at 45%. Notably, value for money is most critical among those over 55 (91%) but less so for younger shoppers aged 18–24 (75%).
Though online shopping provides flexibility, concerns persist with over a third expressing caution about purchasing from brands without physical stores, and three in ten only return items if a physical location is available.
Meanwhile, shoppers are becoming more demanding of brands, with over two-fifths expecting 24/7 accessibility to online brands, compared to 38% last year, reflecting a desire for greater convenience and reliability in digital shopping.
Shoppers continue to cut back
Irish shoppers continue to feel the pinch, according to the survey, with many cutting spending throughout the year.
Half have cut back and bought fewer items, while 46% have purchased more products on promotion or discounted, used loyalty schemes, and bought more own-brand products. Of particular interest are the 40% of those under 45 who have cancelled subscriptions over the past year.
Meanwhile, 55% of those over 55 have used retailer loyalty schemes to get lower prices, highlighting the different ways cost-cutting manifests through various generations.
