Klarna: UK shoppers opt for budget-savvy shopping during 2023 holidays, leveraging AI as credit debt concerns loom large

As holiday shoppers navigate today’s evolving economic landscape and mounting credit card debt concerns, budget-friendly practices and new tech adoption is on the rise, according to new research from Klarna, the AI powered global payments network and shopping assistant. The research, which is based on a survey of over 15,000 consumers across 15 markets including over 1,000 in the UK, unpacks key trends shaping the retail and payments sectors this holiday season.

“Klarna’s new research unveils a broader narrative of financial mindfulness and careful spending this holiday season amidst a challenging economic landscape and credit card debt concerns. Over half of UK consumers are wary about credit card debt this season, with over 1 in 3 doubting their ability to pay off their holiday credit card bills entirely,” said Raji Behal Head of Western and Southern Europe, UK & Ireland at Klarna. “Given this backdrop, it’s no surprise that 82% of shoppers find interest-free payment options like BNPL appealing as they also lean into budget-smart choices, harnessing tech-savvy tools like AI to nab the best deals, and shopping sales events like Black Friday to save money on big purchases.”

Key Findings

Prudence takes priorityThe average budget for gifts in the UK is £450, significantly outpacing spending in Germany (£298), and France (£318), but behind the US where shoppers plan to spend £595 on gifts. However, 60% of UK consumers confirm that rising prices have altered their holiday shopping approach.

  • To maximise value amidst economic uncertainty, UK consumers are reducing spending on non-essential items (65%), purchasing budget-friendly items (55%), and shopping fewer items than before (52%).
  • 52% of UK consumers plan to stick to a holiday budget this year and 1 in 5 will find ways to sell or trade items to finance holiday expenses.

Credit card debt drives BNPL trends: Amid budget management concerns, the dangers of credit card debt loom large among shoppers. Over half (56%) of UK consumers express concern about incurring credit card debt during the holiday season.

  • Just over one-third (36%) of UK shoppers believe they will be unable to pay off their holiday credit card bills in full.
  • The option of splitting payments into equal parts without extra cost or interest resonates with consumers, with 82% finding it useful during the holidays.

Betting on Black Friday: Black Friday remains a pivotal shopping event for UK shoppers.

  • 63% of UK shoppers are sure or considering shopping on Black Friday, slightly less than 2022 (67%).
  • 42% plan to only buy what they can afford and 41% plan to only buy what they would have bought anyway, but at a cheaper price.
  • 60% are waiting for Black Friday deals to buy big-ticket items (electronics, jewellery or furniture), significantly up from last year when the figure was 47%.

AI adoption for smarter shopping: UK consumers are starting to leverage AI for smarter, budget-friendly holiday shopping.

  • A quarter (26%) of UK shoppers are open to exploring AI to enhance their shopping experience this holiday season.
  • Among those open to AI, finding deals and discounts (54%), price comparison (51%) and budget management (44%) emerge as the main attractions.
  • For holiday shopping specifically, consumers find the biggest value from AI comes from saving time (35%) and uncovering products they might not have considered otherwise (23%).
  • Among AI-wary shoppers, the joy that they get from shopping themselves (33%) is the most prominent reason for their reluctance.
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