Hospitality in the crosshairs as discretionary spending falls

Rise in cost of living hits spend on clothes, dining out, and DIY 

Consumers' expectation of online shopping levels in the next 12 months has fallen since asked in December.

The rising cost of living is causing consumers to rethink their spending habits with four in five saying they are cutting back on eating out and eight in 10 reducing their spending on clothing.

Price is also driving buying decisions to the detriment of socially-conscious shopping, with 40% of customers ranking buying Irish as the least-influencing factor.

KPMG, who commissioned the survey, said more than half of consumers also rejected the introduction of additional charges for excess packaging on goods purchased online.

“Inflation is changing consumer behaviour and purchasing patterns and we expect to see a growing emphasis on price promotion and the marketing of special offers in some sectors as consumers shop around for deals," said Keith Watt, head of retail at KPMG.

The findings will give food for thought to business leaders in many sectors, including hospitality and leisure, already facing its own challenges in terms of staff availability and rising input costs.

The survey of more than 1,000 adults found non-essential retail is also being hit by reduced spending, with over three quarters of customers stating they are spending less on clothing (78%) and household DIY budgets (74%).

More than half of consumers older than 45 are shopping around more often for motor fuel. Younger consumers were more likely to report increased spending on subscription services such as Netflix and Disney Plus, with many hiking their prices in recent months.

With the lifting of Covid-19 restrictions, consumers have adopted a mix of online and offline shopping, except for groceries, which remain mostly offline. 

Largest decline

Gift shopping online has seen the largest decline compared to when consumers were asked in KPMG’s December survey.

 However, younger cohorts continue to purchase more online than their older counterparts.

Consumers' expectation of their levels of online shopping over the next 12 months has decreased since asked in December. 

This is likely to result from the practical elimination of pandemic restrictions and the improving weather over the summer months.