UK retailers will get some Christmas cheer thanks to a £98.8bn ‘golden quarter’ sales forecast, says GlobalData.

The analysts forecast total UK retail sales in the golden quarter will rise by 2% to £98.8bn for the three months to the end of 2018.

However, they warn low consumer confidence and confusion over Brexit will inhibit big-ticket spend. GlobalData UK retail research director Patrick O’Brien said that trading down to value retailers is becoming more widespread.

GlobalData Christmas sales forecast

  Q4 2018 growth (year-on-year) Q4 2017 growth  (year-on-year)
Total retail sales
Food & grocery retail sales
Non-food retail sales

Both food and alcoholic beverages will see a significant fall in volume growth compared to the same period in 2017, as consumers trade down in both of these categories.

“However, food is more resilient to low consumer confidence than other retail sectors due to its essential nature,” O’Brien said.

“Expected trends that retailers will focus on over Christmas include alcohol-free beverages (such as flavoured tonic waters), specialist teas, and plant-based protein side dishes (such as lentils, quinoa, chickpeas and tofu).”

Difficult Christmas for fashion retailers

GlobalData expects the golden quarter to be difficult for clothing retailers.

“Midmarket players are expected to be left out in the cold once again as shoppers trade up for enhanced quality, making it yet another challenging Christmas ahead for clothing market leader M&S,” O’Brien said.

“Giving shoppers a reason to make wants-driven purchases, and forgo spending on other categories, through compelling product and value for money will be the key to a successful festive season.”

O’Brien predicted that online pureplays such as Asos and boohoo are likely to be the biggest winners this Christmas due to their “potent mix” of discounts, and fast and convenient fulfilment.

Online retailers are also expected to reap the benefit of the waning power of department stores with health and beauty sales.

Influencers to drive homewares sales

Last year sluggish discounting deterred shoppers from splurging on electricals and entertainment, but volumes are forecast to grow this year as cost prices level.

The home category, which includes furniture and floorcoverings, homewares, and DIY and gardening, is forecast to grow 0.6% in the final quarter of 2018.

GlobalData said much of this growth will come from homewares because of growing consumer interest in social media influencers and fashion retailers’ own home collections.

O’Brien added: “Capping off a strong year for the UK online market in which multichannel retailers have consistently reported robust digital growth, Christmas is set to be the icing on the cake with more consumers than ever choosing to buy online for the festive period.

“Online pureplays will prove popular again this year thanks to their best-in-class shopping experience.”