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UK shoppers set to spend £42.8bn this Christmas

Dec 14
 
Tags: Deloitte
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UK shoppers set to spend £42.8bn this Christmas

Management consultants working in the UK retail industry are in the midst of a particularly busy Christmas shopping season, according to Deloitte.

The business advisory firm published figures showing that retail sales this December are likely to rise by four percent from last year. Total consumer spend is projected to rise by £1.6 billion from 12 months ago to £42.8 billion.

Some of the most significant developments are occurring in ecommerce. Online retail sales are expected to increase by more than a fifth (21 percent) year on year, rising from £5.8 billion to pass the £7 billion mark for the first time.

Earlier research from Deloitte revealed that online orders - accounting for 48 percent of all sales - have overtaken in-store purchases (45 percent) for the first time. This year, online activity is set to make up three-quarters (74 percent) of overall retail sales growth.

Deloitte highlighted a number of contributors to the strong performance of the retail industry this Christmas. One key factor is the rising popularity of the Black Friday and Cyber Monday sales, which has seen many consumers bring the start of their seasonal spending forward to late November.

Christmas Eve falls on a Saturday in 2016, giving consumers a full day of potential shopping just before Christmas Day, while Boxing Day will also provide a full day of trading hours.

Ian Geddes, head of retail at Deloitte, said: "Christmas on a Sunday will maximise the opportunity for consumers to grab a bargain in the sales that follow."

Mr Geddes also pointed out that the relatively low value of sterling against foreign currencies like the euro and the dollar has discouraged people from travelling overseas this Christmas. Foreign visitors, on the other hand, are making the most of their increased buying power in the UK, delivering significant benefits for the luxury market.

Looking to the future, there could be some significant challenges for retailers to overcome, which will require well thought-out strategies and business models.

"Whilst the economic fundamentals for consumers are still looking healthy, with growing employment and wages, retailers will be wary about what lies ahead in 2017," said Mr Geddes.

"Consumer confidence will be tested by macroeconomic uncertainty and inflationary pressures. Never will it be more important for retailers to focus on accelerating productivity and profitability. Having robust business models, with an emphasis on delivering the best possible customer experience, will be crucial to competitiveness."

Recent figures from the British Retail Consortium (BRC) showed that, despite the Black Friday sales, high-street footfall in November 2016 was one percent down from a year earlier. This followed a 0.9 percent fall in October and was bigger than the three-month average decline of 0.8 percent.

BRC chief executive Helen Dickinson said it has become clear that the internet browser has overtaken the high-street store as "the venue of choice to hunt down a bargain". She said physical stores remain an important part of the industry, but retailers must "re-engineer and reinvent their real estate to work seamlessly with their digital presence".

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Image: funstock via iStock

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