Shoppers are spending – but selectively. As retail’s golden quarter nears its crescendo, that was one of the messages from Currys chief executive Alex Baldock as the electricals giant revealed first-half results.

Currys’ reporting period was only up to late October, so Baldock was reticent about going into any detail about peak trading. However, there is no reason to suppose this spending pattern will not have continued and the same will be true for many other retailers in discretionary categories.

The trend for considered spending was evident at Currys in demand for two products perhaps encapsulating the consumer mindset. On one hand, they are willing to treat themselves – sales of upscale coffee machines were up 105% in the run-up to Black Friday.

“Overall spending on presents and festivities this year will be down 13% versus 2022, slipping from £23bn to £20bn, according to PwC”

On the other, the chance of avoiding unnecessary expenditure was evident in sales of air fryers, up 75% in the same period. Sales of both also reflected an ‘at home’ preference among consumers, as customers reduced spending on products such as takeaway coffees.

The City liked Currys’ results – shares were up more than 10% at the time of writing. That reflected progress such as at Currys’ Nordics business.

However, despite the enthusiastic reception in the City, it was notable that Currys left its full-year guidance unchanged. That implies that while the rest of the year looks as if it should be fine, there’s no particular reason to expect stellar trading. This looks likely to be the case for many retailers at the end of another tough year. 

Research from PwC published this week found that overall spending on presents and festivities this year will be down 13% versus 2022, slipping from £23bn to £20bn. 

Mood music

Black Friday kicked off the spending season following a lacklustre autumn affected by factors such as the weather, but there is plenty still to play for as Christmas week begins – and, perhaps surprisingly, immediately afterward. 

While they will of course spend over the coming week, shoppers may also play hard to get by waiting for the Sales. PwC observed that amid the plethora of Black Friday promotions, “the level of discounts was less generous than observed previously [and] as a result, some retailers may enter the run-up to Christmas with more stock than they had anticipated”.

That means “post-Christmas Sales could be back in a bigger way for 2024”, particulary in categories such as toys, technology and home. If so, retailers will need to handle their promotional strategies adeptly to pull in revenues without surrendering too much margin. 

“Many retailers will be happy to meet, but perhaps not beat, expectations this Christmas”

Currys has increasingly been focusing on profitable sales, reflected in an EBIT rise despite a like-for-like decline of 4%. Other retailers, such as Asos, have followed a similar approach. That makes sense in the current climate.

If the mood music from Currys typifies the experience of other retailers, it looks as though Christmas will be OK, although perhaps there will be fewer fireworks than last year when many outperformed expectations.

‘Solid performance and progress in a tough environment’ was the headline on Currys’ interims. Many retailers will take that this Christmas and be happy to meet, but perhaps not beat, expectations. ‘No change to guidance’ may be as good as it gets.