Cost of living: Christmas retail sales expected to drop 3% to £82.2bn
// Retail sales are expected to fall 3% to £82.2bn due to the cost of living crisis
// Gifts are set to see the biggest drop in spending with £11.59bn forecast from £12.44bn in 2021
New research has shown UK retailers are set to see a muted performance this festive season as spending is set to fall 3% in 2021 to £82.2billion in the six weeks before Christmas.
According The VoucherCodes.co.uk Christmas 2022 shopping report, sales are expected to fall by £2.51bn from Christmas 2021, falling below pre-pandemic 2019 results of £83.1bn amid record inflation hits cash-strapped buyers.
However, sales are not expected to fall to the levels seen at Christmas 2020, at the height of the pandemic (£79.7bn).
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The report attributes the drop in spending to the increased financial pressure felt by consumers due to the Cost of life crisis.
Christmas gift sales are set to be the worst hit of any category, with the report predicting a 6.8% drop in gift spending compared to 2021 (£11.59bn vs £12.44bn ), with consumer electronics being the most affected by this drop, as 2.27 billion is forecast compared to £2.7 billion in 2021.
Next come clothing and footwear with a drop of -12.1% and jewelry at -11.1%.
With inflation reaching a record 10.1% and with the prices of basic necessities rising at the fastest rate in 40 years, nearly half of Britons say their financial situation is worse now than it was heading into Christmas 2021.
A fifth of the population also admitted that they were significantly worse off (19.7%) than before last Christmas.
VoucherCodes.co.uk Maureen McDonagh, Managing Director: “Retail, like so many UK industries, has had an incredibly difficult year, and our report predicting year-on-year sales declines this Christmas will be without a doubt doubt worrying news for many retailers.
“With families facing a tough winter as the cost of living crisis continues to deepen, it’s no surprise that consumers are far more conscious than ever about Christmas spending. We anticipate customers will be looking shop early to spread the cost of Christmas and cut back where they can, especially on gifts, as they prioritize spending in other areas this festive season.
“Now more than ever, brands need to deliver proven value to their customers. Initiatives such as offering discounts at the start of the Christmas shopping season to help customers looking to spread the cost of Christmas, offering market-leading discounts on popular and essential products and providing additional incentives for shoppers are just a few of the key ways retailers can build trust. with their customers this Christmas. We expect brands that show their customers’ needs to be top of mind will ultimately see the best performance this Christmas.