The management consultancy firm says that “poor consumer confidence and ongoing economic uncertainty” means most sales growth with likely be due to inflation, with sales volumes set to decrease, Retail Week can reveal.
Sales across November and December are forecast to grow by 2.5% reads Bain’s UK holiday season forecast, shared exclusively with Retail Week. This will be higher than 2024, but below the 10-year average growth rate of 3.1%.
The forecast also takes into account the government’s decision to hold a potential tax-raising budget, set for November 26, late into Christmas shopping season.
“With inflation persistent at 3.8% – and even higher in essentials like food – shoppers’ discretionary budgets are under pressure. Layer in rising unemployment and the looming autumn budget announcement right in the core shopping season, holiday cheer may be in short supply,” the report reads.
“However, not all signs point downward. Many households still have solid savings, and recent interest rate cuts could thaw some of the spending freeze.”
There have been multiple signals of sales momentum slowing into the end of the year. The latest BRC-KPMG retail sales monitor showed 2.3% sales growth for September, down from 3.1% in the previous month. Separate figures out this week from NIQ showed that unit sales in supermarkets declined by 0.5% year over year last month, while Barclays said that consumer card spending declined by 0.7%.
A recent survey by Barclays showed that almost half of UK adults (44%) said they were making changes to their personal finances in advance of November’s autumn Budget. KPMG figures out earlier this month revealed that consumer confidence in the economy had fallen to its lowest level this year.
Bain forecasts most of the growth this Christmas to be from non-store sales, rather that bricks-and-mortar purchases. It says that winning retailers this Christmas will be those that “lead with sharp pricing on key value items, and, as AI enables hyper-transparent pricing, stress value over lowest price to win over strained shoppers”.
The report also encourages retailers to focus on their unique value proposition and make their focus this holiday season “to build loyalty and retention, to strengthen customer lifetime value”.
No comments yet