- UK consumers expected to spend 3.7% more in stores over Christmas
- Restaurants will benefit the most with an increase in spending of 12.9%
Britons are expected to spend more in restaurants and brick-and-mortar stores this Christmas as the sector pins its hopes on a strong “golden quarter”.
Consumers are expected to spend 3.7 percent more in stores than last year between Nov. 1 and Dec. 24, with restaurant trade and electronics sales seeing particularly strong growth, according to Mastercard Spending Pulse data.
The data is an encouraging sign for the market after retail sales fell in September, suggesting consumer strength is beginning to weaken under the pressure of the cost of living crisis.
Festive boost: Shopping centers such as London’s Oxford Street (pictured) prepare for a strong Christmas shopping period
But experts say lower energy bills and a slightly better economic outlook could encourage people to return to the streets.
Paul Martin, head of UK retail at KPMG, said last month: “With warmer weather delaying heating in homes, positive news about falling inflation and slowing inflation rising interest rates, hopefully consumers will feel a little more confident as they think.” turn to Christmas shopping.
‘After years of battling challenges, the resilience of the retail sector has been hit and we are starting to see the gap between the strongest and weakest on the high street widen.
The Mastercard data also appears to reinforce the post-Covid brick-and-mortar resurgence, as online-only retailers continue to suffer.
Mastercard SpendingPulse shows that restaurants will be the biggest relative beneficiaries over the festive period, with sales expected to increase 12.9 percent over last year.
Electronics sales are expected to grow 5.6 percent year-on-year, while fashion and accessories-related sectors are expected to see an increase of 5.3 and 5.1 percent, respectively.
Spending on groceries is also expected to increase, but this is mainly due to persistently high food price inflation, which slowed to 8.8 percent in October from 9.9 percent in September.
The forecasts would mark another holiday season of growth for retailers, after consumer spending increased 17 percent during the final quarter of 2022, according to data from customer advocacy platform Mention Me.
Mastercard Economics Institute chief European economist Natalia Lechmanova said: “Our latest Spending Pulse forecasts show cautious optimism among UK consumers, many of whom will remain cost-conscious this festive season as they face the inflation, higher mortgage payments and an uncertain economic environment.
“The good news for UK retailers and the hospitality sector is that there is a continued desire to spend, particularly on gifts and dining out.”
|Subsector||Expected year-on-year growth in UK Christmas retail sales from 1 November to 24 December|
Retailers prepare for bumper Christmas trading
It comes as supermarkets rush to hire tens of thousands of temporary workers to cope with what is likely to be a bumper Christmas.
Some of the country’s largest grocery stores have so far said they are looking for at least 74,000 additional workers to help them cope with demand.
Marks & Spencer became the latest company to announce it was hiring thousands of extra staff for retail’s important golden quarter.
In the group’s recent third quarter results, Sainsbury’s boss Simon Roberts said it is now “ready to offer Sainsbury’s and Argos customers everything they want for a brilliant Christmas”.
Similarly, Tesco chief executive Ken Murphy said: “We are in a strong position to continue investing for customers and will continue to lower prices wherever we can, doing everything in our power to ensure customers can have a fantastic and affordable Christmas shopping at Tesco.