Retailers have been warned that the upcoming Christmas period could prove to be the sector’s last hurrah for some time, with weakness in consumer spending set to return early in 2012.
According to a study from Verdict Research and business analytics firm SAS, British shoppers will spend an estimated £86.5bn over the festive season, up by £1.2bn from the fourth quarter of last year. However, the volume of purchases is expected to decline by 0.7 per cent year-on-year.
“Consumers will cut back as they recover from Christmas spending and face increased utility bills and high unemployment,” said Maureen Hinton of Verdict. “Retailers must build up enough cash and margin to support them through difficult trading until the next likely boost in spending, Easter.”
The report tipped spending on food to rise by 3.8 per cent to £33.4bn, with the increase largely driven by inflation rather than an improvement in sales. However, it also predicted that non-food sales would be hit as consumers scale back spending on big-ticket items.
Last week, Land Securities chief executive Francis Salway admitted that the outlook for the British retail industry remains “challenging”, with inflation still well above the Bank of England’s target.
