Shoppers are likely to spend more money at Christmas this year than last, but only because the price of food has risen, according to Verdict Research.
Following the release of KPMG/SPSL Retail Health Index, which claimed that year-on-year sales values will drop in the coming quarter, Verdict said food and groceries will take up the largest portion of consumer spending at Christmas.
But it said shoppers will be “selective” with the items they buy because of the added expense.
And consumers will buy fewer food items, meaning that retailers will have to work harder in order to get a good share of Christmas spending, Verdict said.
In the last quarter of 2008, Verdict said, consumers will spend £82.3bn in the retail sector.
Lead analyst Maureen Hilton said: “With food inflation running at 6.3% this quarter, consumers are facing a more expensive Christmas feast. But unavoidable though this extra expense will be, shoppers will be more careful in what they buy, balancing spending on treats with cutbacks on everyday foods.”
The firm added that if the rate of inflation is stripped out, then volume growth in the sector will be 1.3%, much lower than the 2.8% growth seen in the final quarter last year.
It concluded: “Online orders of food & grocery will hit an all time high of £2.2bn, over 50% higher than in 2007 and account for 6.9% of all food and grocery spending during the quarter, with consumers valuing the convenience of home shopping services more at a time of year when they have many other time commitments.”
Consulting director at Verdict Neil Saunders said this week that retailers who survive the coming months will be those that who are the more creative.
