Report predicts tough Christmas for the High Street with shoppers opting for online, department stores and discount stores

Report predicts tough Christmas for the High Street with shoppers opting for online, department stores and discount stores

Britons are expected to spend £86 billion on Christmas this year, up 1% from last year, despite having less disposable income, reveals a report from SAS UK and Verdict Research called How Britain will shop for Christmas.

It forecasts retail spending over the festive season will be driven by food sales, which will grow by 2.9% in the last quarter of 2012 compared with 2011, largely due to rising prices and inflation. 

Volume contraction from discounting 

However, volumes are expected to contract by 0.2% for total retail spending, with food volume sales falling by 0.5%, meaning discounting will be a major part of retailers’ strategies this year. During the festive period, major gift sectors such as clothing and footwear, health and beauty and homeware are forecast to grow.

Online sales are set to account for 10.6% of the total retail spend in 2012. The results show that despite the rising importance of online, where spending will ramp up during Christmas, instore will remain the primary buying channel, meaning retailers need to ensure they remain attractive both off- and online.

The report also said online, department stores, supermarkets and discount stores are set to win out this year, as convenience, competitive pricing and quality products top consumer priorities, meaning less traction instore for the High Street.

Mobile gadgets top shopping lists 

Tablets and e-readers are set to be popular gift items. But tablets are not just for technology buffs anymore, according to the study. Almost 10% of people who shopped online last year did so using a tablet, with this figure expected to rise. Toy tablets for children, or ‘chablets,’ are set to top kid’s gift lists, along with new app-powered Furbies. It also predicted the return of traditional toys such as board games, crafts and baking-relating gifts.

Maureen Hinton, Verdict Research practice leader UK retail, stated: “What retailers need to remember is that tablets will not just be bought but will help people to buy. 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.”

Cindy Etsell, head of retail at SAS UK & Ireland, added: “Click and collect and m-commerce will be particularly attractive for the time-pressed over Christmas. And, 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." 

Etsell stressed: "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 touchpoints will mean retailers can forecast and monitor demand more accurately to at least maintain margins.”