Four in 10 Brits expect that factors such as Brexit will mean this festive season is likely to be more expensive than last year, according to research by analyst Mintel
Mintel also estimates that retail sales will see growth of less than 2 per cent in December, to reach £44.6 billion (including VAT).
As far back as January 2017, 43 per cent of people who bought gifts last Christmas were already worried that the Brexit vote would mean that Christmas 2017 would be more expensive. And Mintel's Brexit-related research shows that concerns over the cost of living have only intensified since then.
Mintel’s Consumer Confidence tracker highlights that financial concern has grown over the past year for many UK shoppers. While in October 2016 34 per cent said they felt financially confident that they’d be OK in the next year or so, this fell to 31 per cent who said the same in September 2017. Additionally, while in September 2017 28 per cent of consumers said they were worse-off than they were a year ago, this up from 20 per cent who said the same in October 2016.
Richard Perks, director of retail research at Mintel said, “The natural response to falling real incomes would be to cut back on spending. 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.”
Research also indicates that consumers are becoming shrewder when it comes to Black Friday promotions, with analysts suggesting its popularity is past its peak. According to Mintel research, 32 per cent of Brits bought items during last year’s Black Friday promotions, while a further 20 per cent browsed products without purchasing them. Over half of those who bought goods said that they purchased items they didn’t plan to on Black Friday and 39 per cent said they purchased items during the event as they were cautious prices were going to rise in 2017.
Of those who browsed products during Black Friday but did not buy, 28 per cent said that the discounts were not genuine. Meanwhile, of those who bought Christmas gifts on Black Friday or Cyber Monday in 2016, 49 per cent said they bought less on Black Friday than they thought they would, while 34 per cent bought gifts that they later regretted.
Richard continued, “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.”