Analyst predicts bumper Christmas season

Verdict has forecast that the upcoming key trading season is set to be the best Christmas since the recession started, with consumers spending at least £2 billion more than last year.

The analyst pointed to the fact that consumer confidence drives spending, saying that shoppers have far more reasons to be cheerful this year. The economic news is more positive; the housing market is moving, with further initiatives being introduced to encourage buying; job creation is outpacing cuts; and, though payment protection insurance (PPI) refunds and the Post Office float do not affect everyone, they have a further halo effect of boosting the view that at last things are getting better. 

“On top of all this,” added Maureen Hinton, research director at Verdict, “during the recession there has been a baby boom, which means one of the prime targets for Christmas spending, kids, is growing.”

These effects led it to predict spending will grow to £88.4bn in the fourth quarter (Q4) of 2012, or an increase of £1.95bn on the same quarter in 2012 as non-food sectors recover, with £52.0bn to be spent on non-food and £36.4bn on food and grocery.

Food is the main focus for Christmas spending, but this year Verdict also forecasts non-food sectors will recover, including some growth in the home related sectors of homewares, furniture, do-it-yourself (DIY) and gardening after years of declines. Though food continues to be mainly driven by inflation (of its 3.8% growth, 2.9% will be from price inflation) volume growth will increase.

Hinton added: “Though consumers will still be looking for value and discounting will continue to be rife in non-food sectors, there will be an increase in volumes this year, which will boost their total sales by £600m.” 

It also said the growth of click & collect services will ensure the traditional busiest day of the season, known variously as ‘Mad, Mega or Cyber Monday,’ will ensure online is the star channel, with product sales of £11.6bn forecast and growth of +12%. 

Patrick O’Brien, principal analyst at Verdict, said: “Shoppers have greater confidence in online retailing now and are prepared to leave holiday purchases right up until just before Christmas. 

“This is supported by the rise of click & collect services, which will be much more in evidence this year. Retailers have rushed to develop and market their click & collect services leaving shoppers the convenience of collecting purchases in a store instead of having to ensure they are at home at the right time.”

Verdict predicts consumers will leave spending to the last minute knowing they are in control of collecting their online purchases leading to Monday December 23rd being one of the busiest for online deliveries.