Retail sales by value in November and December, both for in-store and online food and non-food, is expected to hit £94.5 billion, according to Mintel.
This represents an increase of 3.6 per cent compared to last November and December when sales reached £91.2bn, but this year’s growth will be solely driven by inflation, the market researcher noted.
Total sales by volume are forecast to decline by 2.9 per cent as the market is hit by reduced discretionary spending.
Official data released today has shown that retail sales volumes have fallen by 0.3 per cent in October, following a fall of 1.1 per cent in the previous month.
The latest Mintel festive research shows that this downward trend could continue as just over half (51%) of consumers say that financial concerns will mean their household keeps to a stricter budget this Christmas.
“There’s little doubt that festive 2023 will be a challenging period for retailers, with over half of shoppers looking to cut back. However, there are signs of a well-timed recovery in confidence ahead of the big day,” Nick Carroll, category director of Mintel Retail Insights, said.
“Several weeks ahead of Christmas Day shoppers may be cautious about their spending intentions but, as history shows, once the festive feeling takes over some caution is thrown to the wind. This should mean more opportunity for retailers this December compared to last year.
With the cost of living a constant theme this year, a cautious 56 per cent of consumers say that news stories about ‘shrinkflation’ mean they will be looking more closely at prices this Christmas. Overall, three in ten (28%) consumers expect to pay for more Christmas spending on credit this year, up from 22 per cent in 2022.
Meanwhile, with Black Friday fast approaching, the research reveals that a quarter (25%) of Brits expect to wait for promotions/discounts (eg Black Friday) before buying festive gifts.
“The recovery in confidence is being driven by higher earners, while lower earners are still facing a further year of financial pressures. This will mean a highly polarised spending period, with value still high on the agenda for many. This environment lends itself well to Black Friday promotions, and the earlier launching of deals and the scale of retailers already engaging in the event mean all signs point to the event being as large as ever,” Carroll said.
“Brands and retailers can cut through this festive period by giving some much needed mood-boosting relief after another difficult year. Tapping into this feeling, the tone taken by most marketing campaigns so far has been more playful. Customers will be looking to keep a lid on spending while having a good time, and this makes it more tempting to splash out on lower-priced pick-me-ups, such as value fashion or premium ready meals. There’s also the chance for grocery retailers to receive a boost from the switch away from out-of-home spending by trying to recreate the benefits of eating and drinking out, from the comfort of people’s homes. For retailers as a whole, there’s everything to play for.”