Consumers turn to gift cards as budgets cut ahead of another cost of living Christmas
With the countdown to Christmas underway, new research from the Gift Card and Voucher Association (GCVA) reveals that shoppers plan to rein in gifting budgets amidst the ongoing strain on household finances.
Nearly half (44%) of UK adults are reducing budgets for gift buying as part of plans to scale back spending. Just under half of UK households reported being worse off than this time last year, with 12% experiencing a ‘significant’ worsening of their personal finances.
With food prices, energy bills and mortgage increases taking their toll, the nationally representative survey of more than 1,000 UK adults found that over two thirds (69%) of households have amended their spending habits ahead of the festive season.
Alongside a reduction in spending on presents, over half (57%) have created a stricter budget for spending, 53% have cut back on luxuries and 46% have lowered their allowance for essentials.
To keep Christmas spending in check, some consumers are making the switch from physical gifts to gift cards. 14% of adults intend to increase the amount they spend on gift cards to control present buying budgets and avoid any wasted spending on unwanted gifts. 17% are also increasing the purchase of gift cards for self-use, enabling them to access special discounts or manage their spending on larger purchases ahead of a pricey period.
Appetite for increased purchase of gift cards is highest among Gen Z and Millennial consumers, with 28% of those in the 16-34 age group more likely to give a gift card because of the cost of living crisis.
Commenting on the findings, Gail Cohen, director general of the GCVA, said: “The cost of living crisis is still having a profound impact on people’s finances, forcing them to cut back and amend the way they spend. As people prepare for another Christmas impacted by inflated costs, they are evaluating the way they give.
“People are increasingly concerned about wasting money on a gift that may go unused, instead turning to gift cards to provide the recipient with freedom of choice. With 38% of respondents looking to save on fuel by making fewer journeys, there’s less emphasis on giving a physical gift and instead a move towards presents that can be delivered digitally or easily posted ahead of Christmas Day.”
Changes to spending habits could also become the new normal even as pressure on finances eases, with many saying that they’ll stick to money-saving measures when the situation improves. For example, 41% intend to keep to a stricter budget and over half of those currently cutting back on present spending intend to make this a permanent change.
Gail Cohen, director general of the GCVA, continues: “The gifting sector has seen a huge shift in consumer behaviour as people adapt to changing circumstances and it’s certainly not immune from the impact of this. However, as consumers shorten their Christmas shopping lists, gift cards are in a unique position to offer a convenient solution to avoid waste, access discounts and stick to budgets.”
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