Consumer-facing firms advised to adapt offering as two-thirds of Scots plan to reduce non-essential spending in 2023, says KPMG

Brands and retailers are being advised to tailor their offerings to appeal to consumer behaviour adapting to the economic environment, with two-thirds of Scots planning to reduce their non-essential spending in 2023, according to research published today by KPMG.

The “Big Four” accountancy giant said it at the start of this month surveyed 3,000 consumers from across the UK, including 250 north of the Border, about their spending and saving plans for the coming year. A total of 63 per cent said they will have to cut back on non-essential spending in 2023, with essential costs (food, energy, fuel, mortgage or rent) already being too high and concerns about energy bills after April cited as the two most common deterrents. One in ten Scottish consumers polled highlighted concern about essential costs continuing to rise, whilst consumers also cited fixed-term mortgage deals coming to an end and variable mortgage rates rising as their barriers to spending.

Only 2 per cent of Scots said they will be able to increase their non-essential spending levels in 2023 while a fifth said their outlay would stay at the same level as in 2022. Scots looking to save money most commonly plan to do so by reducing their expenditure on eating out (49 per cent), followed by takeaways (46 per cent) and clothing (43 per cent).

Linda Ellett, KPMG’s UK head of consumer markets, retail and leisure, said consumers are “increasingly changing how they shop to save money, including switching to cheaper retailers, buying more value or promotional produce, and swapping eating out for meals in – understanding these swaps is critical for brands and retailers looking to still be the first choice for spend”.

'Ability and appetite to spend on big-ticket items is limited in this climate, but spending plans do remain for holidays, home improvements and appliances,' says KPMG. Picture: Michael Gillen.

Furthermore, KPMG found that a fifth of the Scottish consumers it polled have no savings, while those that do have an average piggy bank of £9,419 heading into 2023. London was the region found to have the lowest savings average, at £4,725. Of all consumers with savings, nearly half say they are using them to help meet their essential costs, rising to more than 80 per cent amongst some low-income household groups surveyed.

Consumers list "price” as the top purchasing consideration when they go shopping in 2023, as well as the most common reason that they will choose a retailer, with a fifth of Scots saying they will shop more at less expensive retailers over the next 12 months, whilst 31 per cent say they will buy more own brand and value goods, and just under a quarter say they will buy fewer items.

Ms Ellett added: “Ability and appetite to spend on big-ticket items is limited in this climate, but spending plans do remain for holidays, home improvements and appliances. And we know consumers do like to treat themselves and others, so smart retailers and brands can still hold revenues if not volumes if they are targeted in their consumer appeal. But should the scale of non-essential cuts outlined in our research come to fruition, then it likely won’t be enough to stop scarring on both the high street and online in 2023.”

The report from professional services firm KPMG comes after a recent report stating that Scotland's retail sector is displaying “grounds for cautious optimism” despite the cost-of-living crunch.