Golden quarter could bring Christmas cheer to struggling British retailers

Retailers might find seasonal cheer in an early Christmas present as experts predict a strong final quarter to the year.

Sales in the sector are expected to tick up by two per cent year-on-year, according to analytics company Global Data.

The increase will be driven by food and groceries, which are expected to grow 2.5 per cent, a slowdown from 3.6 per cent in the fourth quarter of 2017.

Non-food retail sales will accelerate slightly from last year’s 1.5 per cent growth to 1.6 per cent.

However big-ticket spend is likely to be inhibited by low consumer confidence and Brexit worries, Patrick O’Brien, head of UK retail research at Global Data, said.

Amazon will remain a top choice for Christmas shoppers, and Prime subscribers will use the site as their first port of call.

Online retailers will also be helped by Instagram’s new shopping function, which allows businesses to easily tag products in a photo.

The launch of Apple’s new lower-cost iPhone XR and an updated MacBook Air will lure lower-income shoppers to splash out a little more than usual, Global Data said.

However, fashion retailers will still struggle in the golden quarter, though pureplays – businesses that only sell online – could do well, it predicted.

“It has been a less than stellar year for many clothing retailers and Q4 will be no different. Midmarket players are expected to be left out in the cold once again as shoppers trade up for enhanced quality, making it yet another challenging Christmas ahead for clothing market leader M&S.

“Giving shoppers a reason to make wants-driven purchases, and forgo spending on other categories, through compelling product and value for money will be the key to a successful festive season.

“Online pureplays such as ASOS and boohoo are likely to be the biggest winners this Christmas given their potent mix of discounts, and fast and convenient fulfilment,” said Patrick O’Brien, head of UK retail research at GlobalData.