The UK retail scene looks challenging over Christmas predicts Mintel

The UK retail scene looks challenging over Christmas predicts Mintel

UK retail experts are warning retailers may be in for a "rocky ride" in the run-up to Christmas, with retail sales forecast to grow less than 2% in December.

New research from Mintel also reveals weakening consumer confidence, with many shoppers expecting that Christmas this year may be more costly  than they are used to thanks to rising inflation and a looming Brexit. For others, Black Friday is losing its spark.

UK retail sales in December are expected to grow just 2% to GBP44.6bn (US$59.1bn).

Mintel's Consumer Confidence tracker suggests financial concerns have grown over the past year for many UK shoppers. In October 2016, 34% of shoppers said they felt financially confident they'd be OK over the next year. In September 2017, this fell to 31%.

"The natural response to falling real incomes would be to cut back on spending," says Richard Perks, director of retail research at Mintel. "Added to the tough comparison against last year's boom, retail sales would be expected to be lower this Christmas.

"But we don't feel that we can justify such a negative forecast. Retail sales are holding up exceptionally well, even if they are largely financed by increased borrowing. It seems too close to Christmas for there to be a significant fall in spending this year. We also believe that people may well feel that next year will be tough, so they will have a good time now before reality strikes."

Mintel's report 'Christmas Shopping Habits UK 2017,' also found Black Friday may be losing its spark for some shoppers. Last year, 32% of Brits bought items during the Black Friday promotions, while a further 20% browsed products but did not buy.  

However, of this latter group, over a quarter (28%) said they didn't believe the discounts were genuine. Meanwhile, of those who bought Christmas gifts on Black Friday or Cyber Monday in 2016, 49% said they bought less than they thought they would, while 34% bought gifts that they later regretted.

"It is likely that 2016 marked the peak for Black Friday shopping. Black Friday has been a major distorting factor in Christmas demand over the last few years and there are some signs of disillusionment creeping in.

"Discounting in the run-up to Christmas is usually a sign of distress, and those who do take part will be retailers who are having trouble selling at full price," Perks adds.