Marketers hit with largest drop in consumer confidence since Covid

British high streets face mounting financial strain as Marketing Week — Marketers hit with largest drop in consumer confidence since Covid reports a dramatic deterioration in shopper sentiment. The mood among consumers has soured sharply, delivering a severe blow to businesses just as they prepare for critical trading periods.

According to the GfK Consumer Confidence Barometer, consumer confidence fell to -24, driven by relentless cost of living pressures and unresolved international conflicts contributing to inflation, which stands at 3.5%. Neil Bellamy, consumer insights director at GfK, noted that public mood can switch rapidly.

"October’s results are a sharp reminder of how quickly the public mood can switch,"

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Neil Bellamy, consumer insights director, via Marketing Week

Bellamy explained that the summer's buoyant mood evaporated quickly, creating an alarming deterioration as marketers navigate a difficult economic backdrop. He added that the drop is particularly unwelcome as marketers head into the most important trading period of the year, noting that nascent optimism over a new Prime Minister in the summer has given way to a decline in confidence across the board.

All measures in the research decreased compared to September 2026. The biggest drop occurred in confidence regarding the general economic situation in the next 12 months, which decreased by 14 to -36, while the major purchase index dropped by 14 to -22. The savings index, which asks whether consumers think now is a good time to save money, was the only aspect to increase, rising by 1 to 28, though NIM notes that the savings index does not contribute to the overall index score.

The downturn in confidence coincides with broader structural challenges for high-street operators. Data compiled by insolvency specialists The Guardian — Number of UK retailers on brink of collapse soars by 25% | Retail industry indicates that retail businesses experiencing critical financial distress increased by a quarter in the fourth quarter compared with the previous three months. Julie Palmer, a partner at Begbies Traynor, highlighted that while certain operators adapted well, general retail continues to suffer under rising operational costs and squeezed consumer spending.

Retail Sector	Quarterly Change in Critical Distress	Affected Businesses
General Retail	29% increase	1,457
Food and Drug Retail	17.2% increase	667
Overall Retail Sector	25% increase	2,124

Overall, a total of 28,747 retail businesses in the UK faced significant financial distress, down from 34,494 in the same quarter last year, according to the report. In the food and drug retail sector, the number of businesses facing collapse rose from 569 in the third quarter to 667 by the end of the eleventh week of the final quarter. Despite the quarterly increase in retailers on the brink of collapse, the number of UK retailers in critical financial distress fell slightly on an annual basis from 2,142 in the fourth quarter of the previous year.

Consumer hesitation has directly impacted purchasing patterns, with major index measures reflecting deep caution. Bellamy emphasized that brands must actively address trust and durability to prove their products solve real needs and that consumption is justified. At the same time, footfall metrics from MRI Software revealed that physical retail destinations experienced lower visitor volumes during traditional holiday shopping periods as consumers favored online alternatives and early promotions. Footfall across UK retailers was down 4.9% year on year on Thursday, with high street destinations experiencing the biggest decrease down 6.2% year on year, shopping centres declining 4.2%, and retail parks falling 2.9%.

Many shoppers focused on pre-Christmas shopping, with footfall levels up 18% on Christmas Eve compared with the previous year. Andy Sumpter, a retail consultant at Sensormatic Solutions, noted that after a sluggish start in December, retailers chased critical Christmas trade by launching Boxing Day sales much earlier than usual. MRI Software’s consumer pulse report found that 53% of shoppers planned to complete at least half of their Christmas shopping online. Shares in some UK retailers fell on Friday as traders digested the drop in Boxing Day footfall, with Next down 2% and AO World down more than 4%. Later, an 8% increase in footfall across all retail destinations was recorded as of 12pm on Friday compared with the same date last year, coinciding with the reopening after Boxing Day of major retailers including John Lewis, Marks & Spencer, Next, and Aldi.

The wider economic environment remains complex, with figures showing inflation at 3.5% and the findings arriving less than a week before Chancellor John Healey is due to deliver the Budget on Wednesday (28 October), pledging to back businesses.

Looking ahead, industry analysts expect insolvency levels to remain elevated. Palmer noted that upcoming changes announced in the autumn budget, including planned increases to employers' national insurance contributions, the increase in the minimum wage, and adjustments to capital gains tax, will affect businesses as they navigate these compounded difficulties.