Retail spend over Christmas is set to rise to £86 billion this year, rising one per cent on 2011, according to new research.
As a result of rising prices and inflation, food sales are set to grow 2.9 per cent in the last quarter of the year, though volumes are predicted to decline by 0.2 per cent for total retail spending.
Lead analysts Verdict and SAS UK revealed in their report ‘How Britain will shop for Christmas‘ that food volume sales are expected to fall by 0.5 per cent compared with 2011, which is likely to increase the level of discounts offered by retailers and particularly grocers over the period.
Cindy Etsell, Head of Retail, SAS UK & Ireland, said of the findings: “While spend is up, volume is down and so discounting is expected to be a big part of retailers‘ strategies.
“The combination of multichannel shopping and heavy discounting will increase competitive pressure.”
Supermarkets, department stored and discounters are likely to perform strongly this year as the report found that consumers are focused on convenience, competitive pricing and quality products while major gift sectors including clothing & footwear, health & beauty and homewares are forecast to grow over the peak season.
Online sales are also expected to rise as tablets and e-readers are predicted to be hugely popular this festive season and boost sales of electricals, while toy tablets for children are predicted to be a firm favourite with youngsters.
Recently, market research company The NPD Group revealed that digitally enhanced toys such as the app toy Furby are likely to boost overall toy sales this year and this latest report concurs that this year will see a rise in both technology-related toys and traditional offerings.
Maureen Hinton, Practice Leader UK Retail at Verdict Research, explained that the growing popularity of such technology presents a real opportunity for retailers.
“What retailers need to remember is that tablets will not just be bought but will help people to buy,” she warned.
“Those giving and receiving tablets at Christmas are likely also to be using them to shop, and so retailers need to ensure that sites are optimised and offer a good experience.”
Online sales are forecast to account for 10.6 per cent of total retail spend in 2012 though the report found that buying in-store remains more popular, highlighting the need for retailers to streamline their off- and online offerings.
Etsell concluded: “Click & collect and m-commerce will be particularly attractive for the time-pressed over Christmas.
“It‘s absolutely crucial retailers have analytics technology in place to understand increasingly complex customer behaviours to make the right decisions in real-time on product, price, promotion and placement.
“Having a single customer view across different touch points will mean retailers can forecast and monitor demand more accurately to at least maintain margins.”