Consumers tighten belts this Christmas season

Xmas Direct - Covent Garden

Despite all the mince pies and sherries, the average UK citizen will be tightening their belt instead of loosening it this Christmas. Food and drink prices continue to rise as austerity measures kick in leaving many with less disposable income to spend on seasonal treats and gifts. Christmas lights, decorations and high-end food and drink will be amongst the sacrificed luxuries this year, and many are likely to stick to their regular supermarket chain instead of splurging on a more expensive alternative.

According to the annual report produced by global business advisory firm Deloitte, there is unlikely to be any growth in retail sales before 2013 and spending is set to remain flat over the Christmas period. This year, December could therefore be more of an average month than a merry Christmas for retailers.

There are, of course, exceptions to this rule as certain big name retailers buck the trend. High-end chain stores such as John Lewis are going against the grain as they achieved record sales. The company have reported sales of more than £100 million in the third week of November which is a new record, proving that not everyone is toning down their seasonal spending this year. It is of course true that John Lewis’s average customer is less likely to have been affected by austerity measures. This distinction could result in many of the high-end retailers separating from cheaper high street stores in terms of profits this season.

It is expected that the average consumer will be increasing their spending by as little as 1%, a staggeringly low figure compared to Christmas’s past. This is actually lower than inflation for this year, which stands at 2.7% compared to 5% last year.

For e-commerce, though, the outlook is more positive. In fact, this is the only area of retail where a growth in sales in predicted over the Christmas period, with Deloitte reporting 15% more spending online compared to last year. They also describe how ecommerce ordinarily accounts for 11% of UK spending, but that this will increase over the Christmas season. Online sales are set to hit the 30 billion mark for the first time as more and more people put their faith in e-commerce, despite late delivery due to bad weather conditions in previous years. The internet is also playing an increasingly large role in gift research and price comparison with many shoppers pinning down the right retailer online before they head to the high street to buy.

It is thus the case that some areas of retail will be reaping the benefits this Christmas whilst others will experience an average month in terms of profit. Despite predictions of low spending, however, it looks to be business as usual on London’s busiest shopping streets and austerity measures don’t appear to have dampened the Christmas spirit.

This article was provided by Xmas Direct, who supply Christmas lights for the home and the high street.

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