Christmas shoppers are expected to spend £86bn this year, up 1% from last year, leading analysts have forecast.
Food sales are forecast to grow 2.9% to £51.22bn, largely driven by inflation, according to Verdict and customer analytics firm Sas. Verdict forecasts food inflation will rise to 3.4% over the fourth quarter, which will eat away at customer spending power.
Non-food sales are expected to fall 0.3% to £35.13bn.
While overall retail spend is expected to rise, sales volumes are forecast to fall 0.2% in retail overall. Food volumes are expected to fall by 0.5% and non-food sales volumes by 0.1%.
Mintel research predicts 3% growth in total retail sales this December in the UK.
The Christmas period is likely to feature heavy discounting similar to last year’s bonanza, as retailers compete aggressively for shopper spend.
Verdict expects shoppers will cut back in non-food categories such as big ticket items, homewares and electricals. Food inflation and falling disposable incomes will restrict spending this Christmas.
Verdict analyst Maureen Hinton said: “Food inflation means shoppers are having to spend more to keep up. In non-food they will be cutting back. As a retailer you’ve got to be top of the list as we are buying fewer items. It’s very competitive.”
Some products such as tablets are expected to do well, but the expectation is that customers will spend carefully and reign in on smaller items such as toys.
Discount food retailers are expected to do well as shoppers flock to stores such as Aldi and Lidl to stock up on bargains. “People are buying more like the Germans,” said Hinton. “They go and buy the good offers [in Aldi] then go to general retailers to get all the rest. That’s beginning to have an impact on supermarkets now.”
Mintel director of retail research Richard Perks said: “The run up to this Christmas is starting better than last year. The pressure is not off consumers but most factors are more positive. Consumer confidence is beginning to edge up, thanks in part to the feel good factors which came with the Olympics.
“Unemployment has been falling, though it remains to be seen whether employment was supported by short term jobs associated with the Olympics.”