Spending is set to hit £84.9bn over the six weeks leading up to Christmas, as high inflation rates give retail sales a boost.
VoucherCodes.co.uk’s Shopping for Christmas Report 2023 forecasts a 3.3% rise in retail spending this Christmas, with sales increasing £2.7bn from the £82.2bn spent in 2022. However, whilst sales figures are set to rise, sales volume is forecast to decline by 4.1% indicating that inflation is the primary driver behind spend, rather than consumers purchasing more items.
UK Christmas retail sales. 2021-2022 actuals, 2023 forecast
Retail sales (£bn) | Growth (%YoY) | ||||
2021 | 2022 | 2023 (forecast) | 2021 | 2022 | 2023 (forecast) |
£84.71 | £82.20 | £84.90 | 6.3% | -3.0% | 3.3% |
With the cost of living crisis eating away at budgets many consumers will be cutting back this Christmas and sales of gifts and decorations are predicted to be worst hit. As a result, gift spend is forecast to fall 3% to £11.25bn from £11.59bn, and decorations spend is set to fall 19.6% from £0.82bn to £0.66bn.
However, in better news, the travel sector is forecast to see a 15.2% rise in spend, with sales totalling £2.18bn as consumers travel across the country to celebrate with family and friends (vs. £1.89bn in 2022). Food and drink retailers can also expect a boost with sales increasing 5.5% to £7.68bn from £7.27bn last year.
The report shows in-store sales are set to continue to recover from their pandemic low, with almost two-thirds of purchases set to be made in-store this Christmas (64%). As a result, total offline sales are forecast to reach £54.01bn (+3.5% YoY), whereas online sales figures are more modest at £30.91bn (+3% YoY).
For the first time smartphone sales are expected to exceed PC sales, with smartphone devices now accounting for 41% of online sales, or £12.52bn. In comparison, PC sales hold a 38% share of online sales, with £11.83bn in sales over the Christmas period (£0.69bn less). With retailers increasingly adopting social media marketing and adapting their sites for mobile users, more consumers are choosing to do their Christmas shopping via mobile devices.
Michael Brandy, senior commercial director at VoucherCodes.co.uk, comments: “After a year of price rises and high inflation rates, it comes as no surprise that consumers are planning on cutting back on their Christmas spending this year, and unfortunately retailers are set to bear the brunt of these cuts.
“Whilst retailers can look forward to a rise in spend, they’ll have to work hard to encourage customers to make purchases over the festive season. With limited budgets, consumers will be prioritising value above all else so offering deals, discounts and affordable prices will be vital in encouraging customers to part with their hard-earned cash this Christmas.”
