Retail Sales Holding Up Exceptionally Well

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Retail sales ‘holding up exceptionally well’
4th October 2017

By Karen Pickwick

With shops already entering into the ‘festive spirit’, many of Britain’s retailers are gearing up for their busiest season of the year.

Against a backdrop of rising inflation and weakening consumer confidence, Mintel estimates that retail sales will see growth of less than 2% in December, to reach £44.6bn (including VAT).

This comes as Mintel research reveals that many consumers believe that Christmas this year may be more costly than they are used to. As far back as January, 43% of people who had bought Christmas gifts were already worried that the Brexit vote would mean that Christmas 2017 would be more expensive. And Mintel's Brexit-related research shows that concerns over the cost of living have only intensified since then.

Indeed, Mintel’s Consumer Confidence tracker highlights that financial concern has grown over the past year for many UK shoppers. While in October 2016, 34% said they felt financially confident that they would be OK in the next year or so, this fell to 31% who said the same this September. Additionally, while last month, 28% of consumers said they were worse-off than they were a year ago, this was up from 20% who said the same in October last year.

Richard Perks, director of retail research at Mintel, said: “The natural response to falling real incomes would be to cut back on spending. Added to the tough comparison against last year’s boom, retail sales would be expected to be lower this Christmas. But we don’t feel that we can justify such a negative forecast.

“Retail sales are holding up exceptionally well, even if they are largely financed by increased borrowing. It seems too close to Christmas for there to be a significant fall in spending this year. We also believe that people may well feel that next year will be tough, so they will have a good time now before reality strikes.”

When it comes to individual spend, of those who bought gifts last Christmas, the average shopper forked out £367 on gifts, with 21% saying they spent more than they had the previous year.

HAS BLACK FRIDAY PEAKED?

While once a US phenomenon, Black Friday has, in recent years, also become an unmissable event for many shoppers in the UK. According to Mintel research, 32% of Brits bought items during last year’s Black Friday promotions, while a further 20% browsed products but did not buy. Unable to resist a bargain, over half (52%) of those who bought goods said they purchased items they didn’t plan to on Black Friday and 39% said they bought items during the event as they were worried prices were going to rise in 2017.

On the other hand, it seems Black Friday fatigue may have set in for some. Of those who browsed products during Black Friday but did not buy, over a quarter (28%) felt the discounts were not genuine. Meanwhile, of those who bought Christmas gifts on Black Friday or Cyber Monday in 2016, 49% said they bought less on Black Friday than they thought they would, while 34% bought gifts that they later regretted.

Richard concluded: “It is likely that 2016 marked the peak for Black Friday shopping. Black Friday has been a major distorting factor in Christmas demand over the last few years and there are some signs of disillusionment creeping in. Discounting in the run-up to Christmas is usually a sign of distress and those who do take part will be retailers who are having trouble selling at full price.”

Mintel’s Christmas Shopping Habits UK 2017 report is available to purchase priced £1,995.