The UK retail sector is set to grow by 2.4 per cent in 2014 to £324bn as further signs of economic recovery take hold.
The report, conducted by analytics company SAS and retail analysts Conlumino, predicts retail growth next year will be the highest for six years.
The findings are in contrast to Conlumino findings in January this year when it found that 62 per cent of shoppers said they were planning to reduce retail spend in the first half of this year.
The report, called Retail in 2014: Trends and Winning Strategies, says purchasing of essentials – food, clothing, footware and health and beauty – will drive overall growth. It also said that due to shoppers now using an average of 4.1 stores for grocery shopping, the larger players such as Tesco and Morrisons are seeing their market share eroded by discounters Aldi and Lidl at the value and Waitrose at the premium end.
The Home sector is set to be one of the weakest performing sectors with consumers set to make “highly discretionary” home purchases.
Neil Saunders, managing director at Conlumino, commented: “Over the next year we will see a shift from careful consumption to considered consumption as shoppers put perceived value rather than price at the core of purchasing decisions. Demand is becoming more polarised, which means it is crucial for retailers to develop strong, tiered ranges with sub-brands, such as low, medium and high value product ranges, that stand out in their own right.”
The majority of the population still have a bleak outlook when it comes to personal finances, expecting essential living costs to rise sharply in the next six months.
Discount grocers are predicted to continue to grow as well as retailers‘ Dunelm, Dixons and John Lewis.
The home entertainment sector will experience the most significant fall in size over the next 12 months, reflecting the UK consumers‘ continued shift towards digital distribution and, in particular, subscription services.