Retail’s traditional golden quarter is under way and store chiefs’ attention is pretty much devoted to achieving Christmas sales success. But will shoppers spend?
How is this Christmas expected to play out?
After last year’s washout in the wake of the financial crisis, hopes are high that this year will be better. Mintel has forecast a 2% increase in sales volume and value for December.
So consumers are prepared to splash out?
Actually, mixed messages are coming through about willingness to spend. An ICM survey for Retail Week (September 25) found that 33% of consumers intend to spend less this Christmas than they did last. That was in line with a survey for Asda that also found a third of shoppers plan to spend less this year than last.
Those intending to curb their expenditure hoped to cut back by up to £250 and 11% said they would not even send Christmas cards. Almost half claimed to have already bought some gifts in September. If so, that could mean less cash being splurged in the run-up to Christmas.
But Mintel found that the number of consumers planning to spend “a lot less” this year had fallen by 3% year on year and 20% intended to “splash out”.
The Mintel study also revealed, however, that 34% of shoppers have a budget they intend to stick to - up 2% from last year.
What factors should prop up spending this year?
Improving confidence - as evidenced in last week’s GfK NOP data that showed sentiment at its highest level since January 2008 - combined with the impact of low interest rates and greater disposable income will help.
The reintroduction of the 17.5% VAT rate on January 1, while unwelcome, may well give an extra boost to December turnover as shoppers buy early to avoid the rise.
Any interesting trends to look out for?
Etail performance will be closely watched. Mintel’s research found that internet shopping is likely to be “fairly static”. Just over a fifth (22%) of consumers said they prefer to shop online for Christmas items. The figure is unchanged from 2008.
Similarly, the number of people who said they would shop online for “a few gifts” was up only 1% to 29%.
Mintel director of retail Richard Perks said: “The lack of increase in using the internet to shop for Christmas presents is very surprising and, taken at face value, it would suggest that online shopping has reached a first stage of maturity.
“However, it is more likely that the lack of growth this year reflects the postal strikes and that people don’t feel able to rely on receiving the goods they’ve ordered in time for Christmas.”