In recent months, there’s been a noticeable trend: Brits are spending more, even in the face of rising living costs and economic uncertainty. At first glance, this may seem counterintuitive. After all, with inflation hitting wallets hard and many households tightening their belts, why are people continuing to spend so freely?
The answer lies in a combination of psychological and sociocultural factors that shape consumer behaviour. Here are some key reasons why spending is still on the rise despite financial pressures. According to Barclays, “Non-essential spending saw its highest increase of the year, but essentials had the steepest decline since April 2020
The “Feel Good” Factor
One of the most powerful drivers of consumer spending is the pursuit of immediate gratification. In times of uncertainty, people often seek ways to lift their mood, and purchasing goods, whether it’s a new winter coat or a discounted tech gadget, can provide a temporary emotional boost. Retail therapy, as it’s often called, taps into the brain’s reward system, triggering a sense of pleasure and satisfaction. However, people aren’t rushing to their nearest designer shop to get this gratification. Bargain brands such as Shein and Next have seen an increase in sales, while pure-play brands such as ASOS and Boohoo have seen sales decline. According to the Retail Horizon Consumer report, as discretionary spending remains under pressure, consumers are also making sustainable choices to resell and buy fashion second-hand.
When facing anxiety or stress about the future, spending becomes a coping mechanism. This emotional aspect of shopping often outweighs practical concerns, especially when consumers are bombarded with enticing offers. In the UK, Mortar London, on behalf of Finder.com, found that 78.4% of Brits succumbed to impulse shopping, and more than 22.9% were making impulse purchases on a weekly basis.
Fear of Missing Out (FOMO)
In the age of social media, the fear of missing out is more potent than ever. With Black Friday and other sales events becoming increasingly hyped, consumers may feel a sense of urgency to purchase now before prices rise or products disappear. This feeling of scarcity triggers an emotional response that pushes people to buy—whether or not they truly need the item. Finder.com reports that over 50% of shoppers have blamed FOMO for their impulse buys.
Psychologically, the idea of a “good deal” creates a sense of opportunity. Many Brits might feel they’re getting more value than they actually are simply by capitalising on a temporary discount. This “limited time offer” dynamic can drive impulsive purchasing decisions.
Normalisation of Debt
With the rising availability of credit and buy-now-pay-later options like Klarna and Clear Pay, taking on debt has become more normalised. Many Brits may not immediately feel the impact of their purchases because they’re able to spread out payments. The psychological ease of deferred payments can lead to a higher propensity to spend, as consumers feel less of the financial strain in the moment.
Social Comparison and Status Signalling
Another powerful psychological factor is the desire to keep up with peers. In a world where social media showcases the latest trends, gadgets, and experiences, people may feel pressure to match their social circle’s consumption habits. Whether it’s a holiday abroad or a stylish new wardrobe, keeping up with the Joneses often motivates spending, even when finances are tight.
Conclusion
In conclusion, the psychology behind Brits’ spending habits amid financial uncertainty can be attributed to a combination of emotional drivers, cognitive biases, and societal pressures. The desire for immediate gratification, fear of missing out, and the normalisation of debt all play roles in shaping consumer behaviour. Understanding these factors gives us valuable insights into why spending continues to rise despite financial concerns and why many Brits are still hitting the shops, particularly around seasonal sales events like Black Friday.
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