Christmas sales set to reach £86bn this year, distorted by inflation

British Christmas shoppers are expected to spend £86bn this year, which amounts to a 1% increase in sales on last year, analysts have calculated. However, the increase could be mostly down to inflation of prices on our high streets. While overall retail spend is expected to rise, sales volumes are forecast to fall 0.2% in retail overall. Food volumes are expected to fall by 0.5% and non-food sales volumes by 0.1%.

With non-food sales by value expected to fall 0.3% to £35.13bn, sales personnel working in the retail sector will have to work harder than usual at selling high ticket items. Clearly 2012 is not set to be a bumper year, with goods ‘flying off the shelves’ according to analysts.

Food sales are forecast to grow 2.9% to £51.22bn, largely driven by inflation, according to Verdict and customer analytics firm Sas. Verdict forecasts food inflation will rise to 3.4% over the fourth quarter, which will eat away at customer spending power.

Verdict analyst Maureen Hinton said: “Food inflation means shoppers are having to spend more to keep up. In non-food they will be cutting back. As a retailer, you’ve got to be top of the list as we are buying fewer items. It’s very competitive.”

The Christmas period is likely to feature heavy discounting similar to last year’s bonanza, as retailers compete aggressively for shopper spend.

Verdict expects shoppers will cut back in non-food categories such as big ticket items, homewares and electricals. Food inflation and falling disposable incomes will restrict spending this Christmas.
Some products such as tablets are expected to do well, but the expectation is that customers will spend carefully and reign in on smaller items such as toys.

Discount food retailers are expected to do well as shoppers flock to stores such as Aldi and Lidl to stock up on bargains.

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