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Christmas 'will be good - though not great'

Published: 3 November 2015
UK retail sales are set to grow by 2.5% in December 2015, reaching £42bn, but the appetite for spending online is stabilising.
Christmas 'will be good - though not great'
That's the prediction in a new report from Mintel on this year's festive season, but it also warns that Black Friday could take the shine off Christmas sales.

Director of retail research at Mintel Richard Perks said: "Although there's no doubt there are problems on the horizon, when looking solely at Christmas, it seems to us that consumer demand is holding up well. Retailers should be satisfied with the outcome of Christmas - it will be good, though not great."

One in 10 Brits who bought Christmas gifts last year did so on Black Friday - which this year falls on November 27 - and Mintel estimates that the occasion boosted November's sales by £400m.

"There was a clear message from Black Friday last year," Mr Perks went on. "It damaged Christmas gift spending and it took sales away from full-priced sales over the Christmas period. As one retailer put it, the genie is now out of the bottle. We think that UK retailers will concentrate on damage limitation from now on, though it's clear that no one feels that they can really ignore Black Friday.

"The big question now is whether Black Friday 2015 will be more or less damaging than last year because that is a very important factor in how much money people have left over to spend on Christmas.

"We take the view here that it will be no worse than last year. We feel that retailers learnt their lesson and that this year the focus will be more on long-term profitability. Even those who were reasonably optimistic after Black Friday realised that whatever their profitability on the day itself, the event hit demand for electricals well into the New Year."

Mintel also says the excitement for the online basket is tapering. A healthy proportion (21%) say they will spend more online this Christmas, but that is lower than the 25% asked the same question in 2014.

Mr Perks predicted "modest growth" for retail in 2016. "That said, retailing is changing faster than we have ever known it. This is not just a question of online sales, where growth is beginning to slow; nor is it limited to the growth for discounters.

"The way British consumers shop is fundamentally changing. There is a perceptible shift towards shopping on an as-needs basis. This change is playing into the hands of high streets, and they will be the big winners in the retail scene going forward.

"How retail's structural changes pan out will be the most interesting feature of the next few years, not the odd percentage difference in the rate of retail sales growth."

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