Third of Scots enjoying 'healthy' financial situation despite economic backdrop, says PwC

Scots are showing an improvement in consumer sentiment, with almost a third saying their finances are healthy with money left for luxuries or saving, and boding well for retailers this year, according to a new report from PwC.

Scottish consumers are now prioritising everyday essentials while fashion fixes have taken more of a backseat, according to the report. Picture: Jeff J Mitchell/Getty Images.

Scottish consumers are prioritising everyday essentials, like food shopping and spending on children and pets, ahead of beauty, home improvements and nights out when it comes to managing finances, according to the professional services giant.

It has revealed the latest edition of the PwC Consumer Sentiment survey, conducted in the immediate aftermath of the latest UK government Budget, showing consumers in fact rank grocery shopping as the top expenditure across Scotland.

The firm added that while going out, eating out and buying new outfits have taken more of a backseat, Scots are still prioritising spending on holidays and health and wellbeing – both of which feature in the top five spending categories along with pet food and care, and children and babies, which came second and third respectively. Scotland’s economy is expected to return to full-year growth in 2024, a separate report published at the end of last month stated.

Looking at the whole of the UK, sentiment now sits at -25, compared to -44 in September 2022 and -32 at the beginning of January 2023. That is a “marked improvement from last autumn when the measurement was almost at a historic low – eclipsed only by the start of the global financial crisis in October 2008, when it dipped to -51,” PwC added. The latest figure is also slightly ahead of the -26 seen in March 2020, and the first consecutive period of improved sentiment since early 2021.

The study also showed fewer people expecting to make spending cutbacks than six months ago, down to 78 per cent from 83 per cent, while only one in ten consumers reports that they might be in trouble financially or might miss a bill – down from 14 per cent last autumn. It comes after recent figures revealed how UK retailers enjoyed a stronger-than-expected February.

Improvement

Susannah Simpson, private business lead at PwC Scotland, said: “Whilst the research doesn’t paint an entirely positive picture, it’s encouraging to see some improvement in consumer sentiment. It comes as no surprise that Scottish consumers are showing more positive sentiment in spending categories considered essential, like grocery, pets and children.

"It goes to show just how important our pets have become since the pandemic, and ties in with our recent store openings and closures report, which highlighted pet stores as one of the fastest-growing retail categories in 2022.

“With certain luxuries in the top five categories for Scots, our research shows just how savvy consumers are in recognising the impact of inflation and changing buying habits to align with their priorities. For example, consumers north of the Border are choosing to spend on escaping the famous Scottish climate with holidays – and focusing on their health and wellbeing – over pastimes like eating out and shopping for clothing and accessories.

"Our high streets, retail parks and shopping centres in Scotland are also evolving, with those most responsive to consumer changes likely to reap the benefits by attracting and retaining customers. That innovative thinking has laid the foundation for what we hope will build more sector success in 2023.”