Christmas sales growth expected to slow to 2% this year

By

Barbara Santamaria

Published
Oct 4, 2017

UK retail sales are expected to grow by less than 2% this December as rising inflation and concerns about the economy are causing consumers to be more cautious about spending money, according to Mintel.

The forecast is a decline from last year’s estimated 2.5% growth, however the Christmas period is still expected to be strong for retailers with sales forecast to reach £44.6 billion (up from £42.2 billion last year).

“The natural response to falling real incomes would be to cut back on spending. Added to the tough comparison against last year’s boom, retail sales would be expected to be lower this Christmas. But we don’t feel that we can justify such a negative forecast,” says Richard Perks, Director of Retail Research at Mintel.

“Retail sales are holding up exceptionally well, even if they are largely financed by increased borrowing. It seems too close to Christmas for there to be a significant fall in spending this year. We also believe that people may well feel that next year will be tough, so they will have a good time now before reality strikes.”

Indeed, consumers are increasingly worried about inflation, with 43% of them believing that the Brexit vote will mean that Christmas this year will be more expensive. And only 31% of consumers said in September they feel financially confident that they’d be OK in the next year, compared with 34% who said the same in October 2016.

BLACK FRIDAY FATIGUE

The festive season – the busiest for many retailers – is kicked off by Black Friday, an increasingly vital part of the period for UK retailers. According to Mintel's research, 32% of Britons bought items during last year’s Black Friday promotions, while a further 20% browsed products but did not buy. 

But the research suggests that the shopping event is losing its appeal. Of those who browsed products during Black Friday 2016 but did not buy, over a quarter said that the discounts were not genuine. Furthermore, 49% of 2016 Black Friday and Cyber Monday shoppers said they bought less than they thought they would and 34% said they regretted their purchases.

“It is likely that 2016 marked the peak for Black Friday shopping. Black Friday has been a major distorting factor in Christmas demand over the last few years and there are some signs of disillusionment creeping in. Discounting in the run up to Christmas is usually a sign of distress and those who do take part will be retailers who are having trouble selling at full price,” said Perks.

Black Friday falls this year on 24 November.