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November 9, 2018

Modest Christmas expected for UK retail

Midmarket UK apparel retailers are expected to be left out in the cold once again this Christmas as shoppers opt to trade up for enhanced quality, analysts say.

By Beth Wright

Midmarket UK apparel retailers are expected to be left out in the cold once again this Christmas as shoppers opt to trade up for enhanced quality, analysts say. 

While it has been a year of retail failures, profit warnings and store closures thus far, the so-called ‘golden quarter’ offers retailers the opportunity to gain sales from consumers who are finally ready to prioritise shopping. But low consumer confidence and confusion over Brexit will inhibit big-ticket spend, according to data and analytics company GlobalData.

The firm expects total UK retail sales in the fourth quarter will rise by 2% to GBP98.8bn (US$128.8bn) for the three months to the end of 2018, with food and grocery spend the main driver. Non-food spend is forecast to grow at 1.6%.

It has been a less than stellar year for many clothing retailers and the final quarter will be no different, GlobalData says, noting midmarket players are expected to be ignored in favour of enhanced quality.

“Giving shoppers a reason to make wants-driven purchases, and forgo spending on other categories, through compelling product and value for money will be the key to a successful festive season,” the firm says. 

Online pureplays such as Asos and Boohoo are likely to be the biggest winners this Christmas given their potent mix of discounts, and fast and convenient fulfilment, it adds.

Meanwhile, capping off a strong year for the UK online market, in which multichannel retailers have consistently reported robust digital growth, Christmas is set to be the icing on the cake with more consumers than ever choosing to buy online for the festive period.

“Online pureplays will prove popular again this year thanks to their best-in-class shopping experience,” GlobalData says. “Amazon is set to remain a top choice for gift purchases as its broad product range appeals, and as Amazon Prime subscribers turn to the retailer as their first port of call.”

In addition, online spend will be bolstered this Christmas by Instagram’s shopping function, which launched this year, as well as Pinterest featuring direct links to retailers’ product pages. The ease of purchase through social media will drive impulse purchases of partywear as well as gifts across sectors, GlobalData adds.

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