Christmas ‘will be better than expected’

With Christmas 2011 fast approaching, new research suggests that retailers will enjoy a little more Christmas cheer than might be expected.

Christmas 'will be better than expected'

In fact, Mintel predicts retail sales growth of between 4% and 5% in December, and as much as 1% of that could be real volume growth.

“Retail sales have remained strong because people have been most reluctant to cut back on food and clothing,” commented Mintel’s director of retail, Richard Perks. “So they’ve been prepared to absorb the high rates of inflation in those two sectors in order to maintain their lifestyles and have cut back even harder elsewhere.

“This is good news for retailers. They went into 2011 in a very cautious mood. Faced with the consumer squeeze and rising unemployment they took a very prudent view of the prospects for Christmas. They are, therefore, likely to be short of stock.

“That may not be ideal, but it means they should achieve a relatively high rate of full-price sales. Only the major underperformers are likely to be ‘on sale’ before Christmas.”

Mintel’s Economic Tracker shows that consumers are set to increase their spending over the next three months. But the company sounds a note of caution.

Says Perks: “This forecast is on the assumption that we don’t have another harsh December. Last December Britain experienced very bad weather. Retail sales growth was limited to just 2% and volumes fell by 0.4%. The bad weather cost at least 1% point of growth and possibly 1.5%.”

And he added that the trend towards Christmas shopping online is set to continue.

“Online is an increasingly important part of Christmas retail sales,” he said. “With the majority of online sales through the websites of the major high street or catalogue retailers, the move online is, therefore, not a bad thing for the market leaders – in fact, it’s likely to strengthen their position in the marketplace.”

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