A new PwC study has found that Scottish consumers are among the most concerned about the economic impact of Brexit, although more than half the population still don’t believe it will change their spending habits.
Scottish consumers are among the most concerned about the economic impact of Brexit, but more than half the population still don’t believe the UK’s exit from the EU will change their spending habits, according to new research from PwC.
The findings in PwC’s 2019 Retail Outlook reveal that a quarter of Scots (24%) said their spending habits were affected by Brexit in 2018, with a further 22% expecting to cut back this year. While the majority (54%) believe their spending won’t be impacted by Brexit, the nationwide study across Great Britain reveals the only areas more concerned about Brexit are London and Wales.
Fears are accelerating in Scotland with the 22% who believe their habits will change in 2019 being the highest of the 11 GB regions polled. Last year, the balance between those who did think Brexit would impact their spending (24%) and wouldn’t (76%) was 53%. When looking to 2019, this balance has closed to 9%, a change of 43 percentage points.
The findings also show that a third of Scots (32%) believe they will be worse off in 2019 than last year, while 23% believe they will be better off. Of those who believe they will be worse off, 35% put this down to being less confident in the economy.
Claire Reid, Head of Retail for PwC in Scotland said: “Having voted to remain in the EU, it is unsurprising to see that Scots are among the most concerned about the economic impact of Brexit. While these fears are accelerating, the mood may shift if the UK manages to secure a deal with the EU and create more certainty in people’s minds.
“The fears come despite median earnings in Scotland increasing last year by 3%. Even accounting for inflation, consumers do have more money in their pockets than the previous year. What we are seeing however, is that they are becoming increasingly careful about where that money is being spent.”
Outlook for retailers
The study asked Scots how their shopping habits would change across 13 categories, with more expensive categories the most likely to be hit by reduced consumer confidence. Grocery was the only category where more people plan to increase their spending than will cut back. In total, 37% said they would be spending more on grocery shopping in 2019 compared with 2018, while 14% said they would spend less, giving a balance of +23%.
“Big ticket items”, technology and eating out all had a balance of -20% and almost one-in-three people said they would spend less on clothing, shoes and accessories. This points to UK retailers having to quickly adjust to the ‘new normal’ of subdued trading, where the only way to achieve growth is by taking market share away from other players and adapting to the more conscientious shopper.
Areas where retailers need to focus in order to increase their market share, according to the report, include investing in technology to aid shopper decision making and improve customer experience, and increasing efficiencies to save costs.