Lower footfall and margin impact from promotions will create fiercely competitive trading conditions
Retailers will have to pull out all the stops to benefit from a World Cup sales boost as the tournament prepares to kick off in South Africa next week.
Total sales are expected to grow by around £900m in the second quarter, when the tournament falls. Although that is up 1.3% on last year, according to retail research house Verdict, it is less than the £2.1bn sales rise enjoyed by retailers in the equivalent 2006 World Cup quarter.
Verdict retail analyst Joseph Robinson said retailers would need to work for sales during the contest, which takes place in a tougher economic climate than in 2006.
He said: “An upturn in sales will be reliant on driving volume, with promotional activity having a marked impact on margins.
“Some sectors are set to be adversely impacted due to the combination of a decline in footfall on the high street and disposable income being channelled elsewhere.”
Grocers are expected to achieve the biggest increase in sales, helped by convenience formats well placed to satisfy customer demand and alcohol sales forecast to advance 2.4%.
Sports Direct will highlight its World Cup offers in a new round of TV advertising starting this weekend, after piloting TV ads for the first time earlier this year.
The electricals sector is also in line for a sales bonanza. Volumes are expected to peak in the World Cup quarter as sales of goods such as TVs are pulled forward. This will be the first World Cup to be broadcast in high definition, and many customers are expected to upgrade their sets.
Evidence of that was seen at Comet last weekend. Sales of TVs rocketed 73% year on year, the retailer said.
But Verdict expects DIY projects to be put on the back-burner during the competition as men spend more time in front of the TV. Garden products should show growth if the weather is good, as people host barbecues and World Cup parties.
Expenditure in the second quarter is expected to drop 1.1% for DIY products, while an increase of 1 % is forecast for the gardening sector.