UK retail sales set to grow 2.5% during December says Mintel

UK retail sales will grow 2.5% during December taking total sales to £42.2bn with more than one in five consumers planning to shop more online in the lead-up to the festive season.

New research from Mintel shows that while there will be growth, consumers will still be seeking out bargains with almost one quarter (23%) planning to delay big ticket Christmas purchases until they have seen the Black Friday and Cyber Monday offers. In 2015 20% of UK consumers bought online and 11% in-store during the Black Friday and Cyber Monday sales periods.

This year more consumers plan to avoid the rush and the crowds by turning to etail in increasing numbers. Around 20% of consumers say they will shop online more during the lead-up to Christmas with this figure rising to 24% of men and 28% of 18-24 year olds.

The top three reasons cited by consumers for turning to the internet were cheaper prices (55%), avoiding the crowds (49%) and shopping when it suited them (49%).

Director of research at Mintel Richard Perks said the economic backdrop for consumers remained favourable. “Real incomes are rising and unemployment is falling. There are some worrying signs though. Consumer credit has risen back to record levels and the housing market has weakened a little but overall, the prospects for Christmas remain good,” he said.

Perks added that making the distinction between in-store and online shopping was becoming an increasingly “artificial” measure. “We are seeing pure players recognise the advantages to having a physical offering, signified by Amazon and Zalando’s interest in moving to the high street. At the same time, a number of high street retailers now price match against online retailers, trying to fight back against the continued belief among shoppers that it's cheaper to buy online,” he added.

Overall last year, 93% of British consumers bought gifts for Christmas. Some 86% bought gifts in-store and 76% purchased online. Just under one in ten (8%) bought all of their Christmas gifts online, compared to one in five (18%) who bought all of their Christmas gifts in-store.

Black Friday and Cyber Monday (a promotional period important to Britain in recent years from the US) now kick-start the Christmas shopping season, however they do cannibalise spending when it comes to the traditional British January sales.

Mintel estimates that in 2015, the discounting days boosted November retail sales by 1.5% to reach £440m. One in five (20%) consumers bought gifts online and one in 10 (11%) in-store on either of these days in 2015. Of those who purchased on Black Friday or Cyber Monday, 55% bought things that they would normally have waited to buy in the January sales and 26% held off spending ahead of the Black Friday and Cyber Monday promotions.

“December 2016’s results will very much depend on what retailers do about Black Friday, but if they cut back on such promotions then there will be a knock on benefit to December, as sales roll over into this month. In 2015, December’s results were weak, partly because of Black Friday and partly because of the unseasonal weather, which seems to have been a constant story over the last year. So the comparisons this Christmas are easier,” Perks concluded.

But while the season of goodwill brings out the bargain hunters it also elevates consumers’ altruistic side. A quarter (26%) of consumers agree that given the choice they would choose Fairtrade gifts, rising to 34% of 16-34 year olds. Meanwhile, 15% look for gifts that include a charity donation in the price, rising to 25% of 16-34 year olds. Finally a third (33%) of gift buyers agree they buy British made gifts wherever possible.