Survey indicates short-lived spending boost and increasingly 'fragile' consumer sentiment

PwC’s survey found an increased consumer focus on savings, value, and sustainability, with 60% of people claiming to have increased their focus on savings and prices over the past six months.

A new survey has added to the growing evidence that the recent boost in consumer spending levels is likely to be short-lived, with the latest retail sales figures also beginning to support that theory.

New CSO figures showed retail sales volumes fell for the second month in a row in October, with Covid and inflation fears weighing on consumers’ minds.

Sales fell 1.5% in October compared to the previous month, the CSO said, marking the third decline in four months.

A study by PwC has found that consumer sentiment is “fragile”, and that more than 50% of Irish consumers are anticipating no change to their spending over the coming six months.

PwC’s survey found an increased consumer focus on savings, value, and sustainability, with 60% of people claiming to have increased their focus on savings and prices over the past six months.

“The events of the last two years have changed how we live, work, and shop,” said John Dillon, head of PwC Ireland’s retail and consumer practice division.

"The evolving Irish consumer is responding to the current macroeconomic challenges with an increasing focus on savings, price sensitivity, purchasing online via multiple channels, customer service expectations, and sustainability expectations.

However, faced with cost-of-living increases and threatened by rising Covid-19 levels, it is not surprising that half or more than half of Irish consumers plan no change in spending levels in the next six months." 

PwC also found a surge in mobile shopping popularity, and a greater relevance of environmental and sustainable standards to shoppers.

“Environmental, social, and governance factors are of growing importance for Irish consumers,” said PwC Ireland’s Owen McFeely. "They want to do the right thing for society and for the environment.

“While consumer sentiment is fragile due to Covid-19 uncertainties, we see a retail sector having to adapt their models to account for current market complexities, with consumers continuing to evolve with these changing market dynamics.”

The PwC survey is the third in the last week to heavily indicate that consumer confidence is becoming increasingly fragile.

Confidence at seven-month low

KBC Bank Ireland said its latest monthly findings put confidence at a seven-month low amid increasing Covid case numbers, rising energy costs, and renewed Brexit concerns. A similar study by Bank of Ireland said that mounting Covid uncertainty is rapidly diminishing consumer positivity.

The CSO figures show that other than bars, grocery, and books, all categories saw a sales decline in October, with the biggest drops being a 4.9% fall in the sale of pharmaceutical and medical products, a near 3% drop in fuel sales, and a 13% drop in hardware-related sales.

The latest retail figures coincided with Central Bank data showing that total spending through debit and credit card transactions — including ATM withdrawals — fell by 2%, or €147m, last month.

Total card expenditure outside of Ireland decreased by 3%, or €10m, to €313m in October.