Verdict predicts weak Christmas in-store for UK retailers

Verdict forecasts that total retail Christmas sales will increase by 1.5% in the fourth quarter, down on the 1.8% growth recorded last year.

The retail information specialist said Christmas shoppers will continue to prioritise food and health & beauty purchases and both sectors will outperform the wider market. But electricals will struggle due to ‘the lack of a breakthrough must-have gift’.

Verdict Retail content director Patrick O’Brien said: “Retailers face yet another weak Christmas. 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.”

He continued: “Retailers will attempt to hold their nerve and place less emphasis on Black Friday this year, as experience has shown that it brings forward sales that would have otherwise been made at full price. But those who have struggled throughout the year, especially clothing retailers, will offer major discounts.”

Patrick noted that electricals “have been the driver of Christmas sales in past years, but there is nothing in the pipeline at the moment that can match the excitement of previous launches of game consoles, tablets or smartphones. So we expect electricals retail to underperform the overall market.”

For the home category, he commented: “Though protected by the spike in housing transactions in March, this was due mainly to buy-to-let landlords buying property ahead of an increase in stamp duty. So the boost to home retail sales has already played out. Low levels of housing transactions since then have dampened demand.

“With the weakness of the pound threatening to increase prices next year, due to the dominance of imported products, consumers planning to make big-ticket purchases may be persuaded to buy sooner rather than later, in order to get the best deal – though many will still delay until the post-Christmas sales.”

He said he expects online sales to continue to grow much faster than overall retail, with Christmas gift shoppers being increasingly attracted to the convenience of 24-hour shopping.

“More retailers now offer click & collect and other collection options, and they have also invested in improving delivery services – offering same day and named day delivery as well as narrower time slots, making online shopping more attractive than ever,” he concluded.

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