Britons are splurging this Christmas on their pets with a huge spike seen in the demand of pet food, treats and toys. show multiple reports across the industry.
Brits' love for their pets can be seen in the recent trends. Sales of Christmas pet lines are up 964 per cent year-on-year at Waitrose online. The food ranges have had some of the biggest increases. Visits to the Waitrose online mince pies for dogs page have risen by 351 per cent in last 30 days.
At John Lewis, sales of seasonal themed dog toys have increased 98 per cent compared with this time last year.
According to Emma Clifford, associate director of food and drink research at Mintel, this trend can, in part, be put down to the trend of pet humanisation.
“The ongoing ‘humanisation of pets’ means pets are increasingly seen as family members, and stress relievers – with many owners willing to spend more on their pets’ care,” The Guardian quoted Clifford as saying.
“We’re known as a nation of pet lovers … nearly three-quarters (73 per cent) of pet owners who use and buy household care products say that looking after their pet’s health is more important than keeping their homes clean."
In 2023, a survey found that 18 per cent of Britons planned to spend more on their pet at Christmas than on their significant other. Meanwhile, research by Mintel found that more than half (56 per cent) of pet owners would rather cut back on money spent on themselves than on their pets.
Industry reports state that the majority of owners spend about £26–£50 on their pets per month while the UK spends £10 billion a year on their pet dogs. 58 per cent of owners buy birthday and Christmas presents for their pets.
Families are set to splash out on Christmas this year as expected spending hits a three year high as the cost-of-living pressure eases, according to RSM UK’s latest Consumer Outlook.
Families expect to spend an average of £760 on Christmas this year, up £158 or 26 per cent on £602 last year; and £694 in 2022. Last year consumers spent on average around a third more than expected, so 2024 average spend could break the £1,000 mark if the same overspend happens again this year.
A third of families (33%) plan on using some form of credit, including a credit card, buy now pay later arrangements, a loan or using overdraft, to fund Christmas this year. Half of all families (50%) plan on bringing forward their Christmas spending to spread the cost of purchases and take advantage of discounts such as Black Friday and Cyber Monday.
The EY Holiday Shopping Survey has also found that the consumers have started their holiday shopping earlier this year, driven by a desire to spread out their spending.
The top three categories that families plan on spending more on include Christmas presents (33%), Christmas dinner (33%) and food and drink at home (32%). Whereas the biggest cutbacks will be homeware (42%), eating and drinking out (40%) and adult fashion (37%).
“Expected Christmas spending hitting a three year high will be welcome news to retailers as families look set to splurge on Christmas presents and food and drink at home. Consumer confidence improved for the first time in three months in November, but it remains fragile and any further dips in confidence could derail expected spending,” Jacqui Baker, partner and head of retail at RSM UK, commented.
“Many retailers will be hoping that Black Friday deals can kickstart sales throughout the Golden Quarter to ensure they are in the best possible financial position going into 2025 to help offset the looming uplift in costs post-budget.”
With the UK food market expected to contribute £19.3 billion in sales to the UK food and grocery sector by 2028, product differentiation will be key to thrive in this competitive landscape, says a leading data and analytics company.
UK grocers must move beyond competing solely on price and prioritize innovation in their product offerings to attract a growing base of transient shoppers. Developing unique and diverse food ranges is essential to drive long-term growth and customer loyalty.
Eleanor Simpson-Gould, Senior Retail Analyst at GlobalData, comments, “A saturation of loyalty schemes and price matching promotions by UK grocers is fuelling consumer switching behavior. The competition regarding pricing, product variety, and quality has intensified to a point where UK consumers are willing to visit several grocers for weekly food shops to get the best deals.
“Though discounts and promotions are a strong driver of food and grocery purchases for UK consumers, quality and range perceptions must underpin product development strategies as price concerns ease. These factors offer a more significant point of differentiation in this highly competitive market.”
GlobalData’s How Britain Shops Survey reveals that the proportion of UK consumers who stated that branded products are appealing to them in the food and grocery market is significantly lower (50.7 per cent) than that compared to range (87.3 per cent) value for money (81.1 per cent). The low priority of branded goods and high priority of range and value for money drivers is favorable for grocers and indicates a strong preference for private-label ranges.
Simpson-Gould continues, “Grocers must invest in private-label ranges to secure a clear differentiation from competitors, improve impulse spending opportunities and bolster volume growth. A strong private-label offer must include world food options, fresh bakery products, broad ready-meal ranges, snacking and food-to-go items.
"Tesco’s Finest range innovation in 2024, consisting of new summer picnic items and meal deal options, is an excellent example of successful private-label differentiation.”
While core categories, food, soft drinks and hot drinks, will achieve robust growth between 2023 and 2028, alcoholic beverages and tobacco and e-cigarette markets are forecast to underperform significantly.
GlobalData estimates that the tobacco and e-cigarette market will decline at a CAGR of 0.4 per cent between 2023 and 2028, lower than the alcohol market, which is set to achieve a moderate CAGR of 1.6 per cent in the same period.
Ahead of the disposable vape ban in 2025, grocers must ensure alternatives such as e-liquids and refillable tanks are available for consumers looking to switch smoking methods. To combat slowing alcohol sales, grocers should reduce ranges of high-sugar, low-spirit level alco-pops, typically favored by younger demographics and expand their propositions of sugar-free alternative soft drinks, energy drinks and non-alcoholic mixer ranges.
Simpson-Gould conlcudes, “Heightened health concerns, changing social attitudes and government initiatives will inhibit growth in the tobacco and e-cigarette and alcohol markets. Both markets will account for a smaller proportion of the total UK food and grocery sector by 2028, making these categories undesirable areas for product development.”
Shoppers’ ability to afford Christmas treats has been put under threat as retailers warned November could mark a turning point for inflation, with the recent fall in prices slowing amid increased fresh produce costs and fewer discounts on the shelves.
According to figures released by British Retail Consortium (BRC) today (26), shop price deflation was at 0.6 per cent in November, up from deflation of 0.8 per cent in the previous month. This is slightly above the 3-month average rate of -0.7 per cent. Shop price annual growth remained its lowest rate since September 2021.
Food inflation slowed to 1.8 per cent in November, down from 1.9 per cent in October. This is below the 3-month average rate of 2.0 per cent. The annual rate continues to ease in this category and inflation remained at its lowest rate since November 2021.
Fresh Food inflation accelerated in November, to 1.2 per cent, up from 1.0 per cent in October. This is in line with the 3-month average rate of 1.2 per cent. Inflation was its lowest since November 2021.
Ambient Food inflation decelerated to 2.7 per cent in November, down from 3.1 per cent in October. This is below the 3-month average rate of 3.0 per cent and remained at its lowest since February 2022.
Helen Dickinson, Chief Executive of the BRC, said, “November was the first time in 17 months that shop price inflation has been higher than the previous month, albeit remaining overall in negative territory. Food prices increased for fresh products such as seafood, which is more vulnerable to high import and processing costs, especially during winter.
"Tea prices also remained high as poor harvests in key producing regions continued to impact supply. While coffee prices experienced a momentary dip, price rises are imminent as global coffee prices approach record highs. In non-food, while many retailers unwound some of their discounting, there are still many bargains across fashion and furniture.
"Customers looking to upgrade their electricals were able to pick up some great deals in early Black Friday sales. With significant price pressures on the horizon, November’s figures may signal the end of falling inflation.
"The industry faces £7 billion of additional costs in 2025 because of changes to Employers’ National Insurance Contributions, business rates, an increase to the minimum wage and a new packaging levy.
"Retail already operates on slim margins, so these new costs will inevitably lead to higher prices. If the government wants to prevent this, it must reconsider the existing timelines for the new packaging levy, while ensuring any changes to business rates offer a meaningful reduction for all retailers as early as possible.”
Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, said: “Shoppers are still being cautious by shopping savvy for the essentials and holding back their discretionary spend, so the lower level of inflation should help sentiment ahead of Black Friday promotions. And with lower inflation than this time last year, many food retailers are extending offers and discounts to help sales momentum in December.”
The Centre for Economics and Business Research (CEBR), which produces the tracker for the supermarket, predicted that households will face “dampened spending power over the festive period”. It said the rising cost of essentials would be particularly concerning for households on lower incomes.
Rising inflation may subdue household spending this Christmas according to the latest figures from Asda’s Income Tracker.
The tracker, which measures household disposable income, fell for only the second time this year, decreasing by £1.98 in October, leaving the average UK household with £247 per week. The 2.3 per cent rise in inflation was primarily driven by higher energy prices, reflecting the rise in the Ofgem price cap that took place at the start of the month and caused housing, water, electricity, and gas bills to increase.
It has led CEBR, who produce the Income Tracker on behalf of Asda, to predict that households will face “dampened spending power over the festive period”. The rising cost of essential spending will be particularly concerning for households on lower incomes heading into Christmas.
These households saw the slowest growth in disposable income since January this year at just 1.6 per cent. Consequently, their net income does not cover the cost of bills and essential spending – leaving them with an average weekly shortfall of £69.
Across age groups, those aged 30 to 49 experienced the fastest annual rise in the cost of essential spending, which increased by 3.8 per cent to £765 in October. These households, often made up of younger families with children, face significant essential expenses, including childcare costs.
The rise in essential spending also saw these households record the weakest growth of any age group with their disposable income only increasing at 5.5 per cent to £298 per week in October – their weakest growth since January. Cebr expects the inflation rate is expected to remain above target for the rest of the year.
Sam Miley, Managing Economist and Forecasting Lead at Cebr, said, “October’s reading was only the second time this year that the Income Tracker reading has fallen on the month.”
“This was largely expected, given the increase in the Ofgem price cap that took place at the start of the month, bringing higher energy bills. These increased energy prices will persist over the rest of Q4, leading to slightly dampened spending power over the festive period.”
Two-thirds of consumers are concerned about climate change, but only 15 per cent are prepared to pay extra for environmentally friendly food and drink, according to a survey carried out by Euromonitor International, highlighting how that consumers continue to make choices that positively impact the environment but are adopting an affordability mindset.
Eco Logical is one of Euromonitor’s five Global Consumer Trends for 2025 and comes as the debate on climate change hots up after recent major weather events around the world. The survey found that more than 63 per cent of consumers have tried to adopt habits that are positive for the environment in 2024 due to worries about climate change.
“Spending on sustainable products remains a conscious decision based on personal values, but consumers also pay close attention to the key benefits these products deliver. Sustainability claims require tangible evidence,” said Inga Klebanskaja, senior research consultant at Euromonitor International.
“The Eco Logical trend challenges businesses to create the right claims on the right products for the right audience. Sustainability is no longer brand-enhancing but a prerequisite for innovation that drives growth.”
Klebanskaja added, “Trust in green labels hasn’t wavered over the years, but affordability continues to be the top barrier. Some 40 per cent of consumers said high price prevented them from making sustainable purchases. In 2024, 52 per cent of consumers considered eco-friendly labels trustworthy. Only 15 per cent would pay more for these food and drink products.”
Euromonitor found that the number of online Stock Keeping Units (SKUs) with sustainability claims increased from 4 million in 2022 to 5 million in 2024 across 11 FMCG industries and 25 countries.
Klebanskaja concluded, “Brands with a tangible sustainable proposition saw a 1.5 per cent higher growth rate over the same period compared to non-sustainable equivalents.
“Beauty and personal care brands’ enhanced offers in this space have generated more than US$120bn in 2023, the highest industry by sales. Pet care products with sustainability claims recorded the strongest compound annual growth rate (CAGR) from 2020 to 2023.”
Klebanskaja concluded: “Businesses need to use sustainability claims to show the value of their product and connect those features to qualities that drive consumers’ buying decisions – efficacy, quality or safety. They should build sustainability into products or services that are familiar to their target audience for easier adoption.”