PwC Consumer Sentiment Survey – Autumn 2021
Record levels of consumer confidence finally revert to more expected levels, as inflation, concern over supply chains and out-of-stocks cause a slight decline in optimism. While sentiment remains broadly positive, these new realities may offer an insight into future spending. We look at what these findings might mean for retailers and hospitality operators as we head into a critical Golden Quarter.
Consumer sentiment returning to a pre-pandemic “normal”
Consumer sentiment has been somewhat turbulent in the last 18 months. At the beginning of the pandemic, we saw the biggest ever drop in confidence, followed by a steady recovery as government support and other interventions helped confidence grow.
But we’re now seeing a slight waning of consumer confidence, as sentiment returns to more normal levels.
However, at +3, sentiment remains positive – i.e. more respondents thought they would be better off in the next 12 months than worse off. It has returned to the same level we had seen in December 2019, the last sentiment survey we conducted before the pandemic. And while it’s at the lowest level we’ve seen in 2021, confidence is still higher than at any point between the 2016-19 period following the EU referendum.
Positive overall, but slight decline everywhere
This time, we’ve seen sentiment decline in almost every age category, region, and demographic. Many of these are slight declines, but it’s been enough to push several groups into negative territory.
Contrast that with our June survey, where every demographic group and region was net positive for the first time, it suggests that people might be starting to feel uneasy about financial security.
There’s been quite a significant decline among the older age groups, with all the over 45s in negative numbers, and 55 – 64s now the least optimistic group (-11 net). However, those under 45 remain largely positive, with 25-34 year olds being the only demographic group to have maintained sentiment. This may be a delayed impact of the vaccine effect, with most now having had the opportunity to have been fully vaccinated since our last survey in June.
Interestingly, while under 25s are still the most optimistic age group, we’ve seen sentiment fall fastest among them (-10). Usually, at this time of year, we expect a bump in their confidence, driven by a return to university or entering the workforce. The end of furlough and fewer job opportunities for graduates could be having an impact on the sentiment of this key age group.
Inflation and out-of-stocks driving decline
With talk of price inflation for non-discretionary goods and services, we wanted to see how people had actually been affected.
Around half of people surveyed have experienced either grocery price inflation (compared to earlier this year) or utility/petrol price inflation. A similar number of people expect that inflation to continue over the coming months. With our survey conducted before the failure of several large utility companies, and before the current petrol shortages, we would expect even higher numbers if we conducted the survey now.
Similarly, the majority of respondents have witnessed empty shelves at supermarkets, and for most of those people that translated into items being out of stock in their grocery basket. People indicated that they are only expecting out-of-stocks to get worse as we approach Christmas.
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