UK retailers told to expect ‘weak’ Christmas

By

Barbara Santamaria

Published
Oct 26, 2016

Retail sales will grow just 1.5% in the fourth quarter of the year, according to a forecast by research firm Verdict. This will be down on the 1.8% growth recorded in the same period last year, reflecting the UK’s doubts about the economy and the impact of heavy Black Friday discounts.

“While price rises caused by the historically weak pound will be largely staved off until next year, low consumer confidence in the economy post-referendum will keep spending down unless retailers can convince shoppers to bring forward big-ticket purchases ahead of those anticipated rises,” says Verdict Retail Content Director Patrick O’Brien.

Christmas shoppers will continue to prioritise food and health & beauty purchases, with both sectors outperforming the wider market. Food sales are expected to grow by 2.3%, while health & beauty sales are forecasted to achieve the strongest growth with 3.8%.

Department stores will dominate the premium segment of the beauty market thanks to new concession partners such as Charlotte Tilbury and Kat Von D, said Verdict. At the same time, gifting ranges from brands such as Missguided, Ted Baker and Cath Kidston will help beauty retailers attract younger shoppers.

As for the clothing and footwear sector, sales are expected to grow just 1.4% in the crucial festive trading period as shoppers become increasingly immune to discounting tactics. Retailers will have to place a particular focus on the product, design detail and newness to lure shoppers, said Verdict Retail.

Premium brands with strong international brand appeal such as Kurt Geiger, Burberry and Ted Baker will benefit from an increased tourist spend due to the plummeting pound.