Retail spending in 2012 is likely only to rise by 1.2%, the third lowest rate in almost four decades.
The first quarter of the new year is likely to be “very hard”, a study by retail research house Verdict and technology firm SAS found, but consumer confidence in the second and third quarters is expected to be boosted by the Queen’s Diamond Jubilee festivities and the Olympics.
Non-food retailers are expected to suffer another year of sales decline - the fourth in five years - as revenues come back by about £740m altogether.
Retailers of electrical goods, furniture, homewares and DIY are anticipated to be among the hardest hit as sales slide £900m year-on-year. Clothing and health and beauty sales are likely to rise.
While grocers are expected to benefit from the trend towards eating at home, the leading supermarket groups are expected to have to battle ferociously in the light of planned space growth of 5.5% in 2012.
The report stated: “This will add around 6m sq ft of new space, but volume growth will be at a minimum as shoppers cut out waste and buy wisely.
“Market leader Tesco will be the most challenged as its competitors open stores in direct competition to it, offering consumers more choice, in more and more of its locations.”