Christmas spending set to edge up, but a polarisation of retailer performance

It’s almost December and retailers are now fully geared up for the final phases of Christmas trading. With a fragile economy and reports of record Black Friday spending, many retailers enter the final weeks of the golden quarter feeling cautious.

Overall 38% of shoppers expect they will spend more this Christmas, while 88% say they will be looking for ways to make Christmas special without breaking the bank this year. Much of the growth is expected to come from buying presents for close family, and treats and snacks to eat and drink during the festive period. Shoppers expect their spending on food for Christmas day will be broadly the same as last year.

There are a few areas where shoppers expect to cut back. Spending on Christmas clothing, decorations and presents for friends are set to be lower this year. Shoppers also anticipate that they will hold back on going out to pubs, bars and restaurants – inline with the trend we’ve seen throughout 2018.

Taking a look at food retailers, we expect another strong performance from the discounters. 48% of shoppers say they will do a lot of Christmas shopping at Aldi and Lidl this year. 12% plan to do their main Christmas food shop at Aldi, while 4% expect to do so at Lidl.

Grocery market leader Tesco is set to be visited by 27% of shoppers for their main Christmas food shop, followed by Asda (16%), Sainsbury’s (15%) and Morrisons (12%).

Following the long-term trend, we expect more shoppers than ever will buy presents online this year. 56% of shoppers expect they will buy more online this year, and 28% say they will buy something online on Christmas day itself – typically spending gift vouchers and downloading digital content.

Savvy also asked shoppers about their views on retailers’ Christmas TV ads. 55% of us look forward to the Christmas ads starting, rising to 70% amongst 18-34 year olds. However, the research highlights retailers need to be mindful of perceptions of their increasingly high budget productions, with 67% of respondents saying that retailers spend too much on their Christmas ads and 80% agreeing that retailers would be better donating the money to charity.

Overall we expect Christmas retail spending to increase a little, with a polarisation of retailer performance. High street retailers with a weak digital presence will find themselves particularly exposed as shoppers spend more online and as margins are squeezed by pre-Christmas discounting.