After splashing out over Christmas, many consumers have spent January tightening their belts – but for some, the impulse to spend less now stretches beyond the first month of the year. The viral TikTok trend ‘No Spend January’, which began in the USA and which 26% of Americans have attempted according to a NerdWallet survey, has grown in popularity and expanded to full ‘No Buy Year’ commitments. Even financial institutions are joining in; savings and investment app Plum launched a ‘No Spend Challenge’ in January that it claims will help British consumers save up to £600 a month.
The idea is that those taking part in the challenge will spend only on essentials – which, while a worthy idea for cash-strapped households and the environment, presents a significant challenge for retailers, especially SMEs. “As a small business owner selling physical products, I absolutely understand why many consumers are reassessing their spending this year and becoming more mindful with their money,” said Judith Oatley, founder of Mai Joie Botanicals. “Conscious budgeting can be a positive thing when it encourages people to spend with intention rather than impulse.
“That said, trends like No Spend January and a No Buy Year can have a real knock-on effect for small businesses, particularly those where sales directly support a sole founder or family. Unlike large retailers, small businesses don’t have the same financial buffers, and even a short pause in consumer spending can significantly impact cash flow, product launches, and long-term planning.”
A shift rather than major change
Oatley says she’s seeing “a shift rather than a complete stop” in consumer spending. Customers are buying less but being more selective, which aligns with the trend toward more mindful, considered shopping that characterised the festive period. “Many are choosing fewer, better-made products and are increasingly mindful of where their money goes. For my business, this has reinforced the importance of clear communication around value, quality, and longevity, rather than pushing volume-led sales,” she said.
While the desire for a “spending reset” appears strong, movements like No Spend January have historically had their limits. Waitrose’s latest analysis of Dry January behaviour shows that abstention trends often lose steam. In January 2022, alcohol sales dropped by around 42% versus the average for the rest of the year. By January 2026, this reduction narrowed to just 25%, suggesting a shift toward a more moderate “Damp January”. Retail analysts caution that spending cutbacks may follow a similar pattern, starting strong but softening as the year progresses.
With economic pressures continuing to weigh on households, some experts warn the opposite effect might also emerge. The so‑called “Lipstick Effect”, where consumers treat themselves to small, uplifting purchases during tough times, could support sectors such as beauty, home fragrance, and affordable luxury.
Preparation is key
Kamilla Fernandes‑Pickett, marketing and communications senior manager at Capital on Tap, says careful financial planning is essential during quieter periods. “Periods like No Spend January and a No Spend Year make careful forecasting and cash flow management really important,” she said. “Even a short decline in customer spending can impact the day-to-day operations of the company. Therefore, it’s so important for small businesses to monitor their daily cash flow, delay non-essential expenditures, and take advantage of flexible financial tools where needed.”
“Ultimately, trends like No Spend January don’t have to be a setback,” she stated. “Businesses that plan ahead of their competitors, manage their cash flow carefully, and connect meaningfully with customers can maintain stability even at a time when spending slows down.”
As 2026 unfolds, the question for retailers is whether the no‑spend trend will evolve into a sustained behavioural shift or fade into the moderate, hybrid patterns seen in other self‑improvement movements. For now, SMEs should ensure they’re prepared for both possibilities.
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