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Christmas spending to drop for first time in 5 years

By Don-Alvin Adegeest

21 Nov 2017


While it is still the most profitable time of year for brands and retailers, Christmas sales in 2017 are expected to drop for the first time in five years. A shift in consumers spending habits and rising inflation will mean careful spending this holiday season.

According to the Retail Gazette, new research compiled by HIS Markit for Visa suggests spending on Christmas getaways, clothing and household goods in November and December could dip 0.1 per cent.

The figure is set to increase for high street retailers who will be even more affected, with end of year sales expected to fall by 2.1 per cent, a third consecutive drop.

Online spend is expected to largely offset this drop, rising 3.6 per cent and accounting for a record 40p in every pound spend this Christmas.

“Looking back, consumers were in a sweet spot in 2016 – low inflation and rising wages meant there was a little extra in household budgets to spend on the festive period,” Visa’s chief commercial officer Mark Antipof said.

Online and mobile sales will see a growth this Christmas

“This year has seen a reversal of fortunes – with inflation outpacing wage growth and the recent interest rate rise leaving shoppers with less money in their pockets. Although overall sales are likely to disappoint, we expect some clear winners to emerge. Online and mobile are set to take a record share of Christmas spending.”

The news comes after worrying trading figures on retail spend were released last month, with more than one source reporting record breaking declines, driven by rising inflation and unseasonable weather throughout the month.

UK high street giants Marks & Spencer and Next both posted disappointing results in October, a worrying indication that Christmas will not fare any better.

Photo credit: Marks & Spencer website.

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