Christmas festivities may be in short supply if the holiday retail forecasts from Global Data analysts hold true. However, there is a glimmer of hope for the fashion and beauty retail sectors in the latest data and analytics company’s report.
According to projections, consumer spending is expected to increase by 3.4%, driven in part by a notable 9.3% surge in prices. This uptick in spending is encouraging, but it underscores a significant gap between escalating prices and sales growth—a challenge exacerbated by persistent inflation’s impact on the UK retail landscape.
This forecast falls short of last year’s growth and signifies a second consecutive quarter of slowed expansion in 2023. Shoppers are anticipated to adopt a more prudent approach as they navigate these elevated price levels.
The anticipated 3.4% growth would result in total retail spending of £109.7 billion in Q4 2023. However, this figure pales in comparison to the 6.2% increase recorded last year when people celebrated more freely following the relaxation of pandemic-related restrictions.
On a positive note, the fashion and beauty sectors stand out among non-food categories. Clothing and footwear are projected to experience the most substantial growth, despite facing a challenging comparison with the previous year when many shoppers splurged on new outfits for canceled pandemic-era celebrations.
Additionally, these sectors demonstrate resilience in the face of cost-of-living challenges, particularly among younger shoppers who are eager to embrace fashion experimentation once again.
Another noteworthy trend is the ongoing focus on building capsule wardrobes, comprising small collections of versatile clothing items that can be mixed and matched, often featuring premium pieces suitable for gifting.
In the gifting arena, beauty products are expected to shine, likely experiencing year-on-year sales growth. «Health and beauty» are poised to benefit from retailers expanding their gifting and pampering offerings. The affordability of many beauty items is anticipated to make them attractive choices for budget-conscious shoppers.
Nick Gladding, Lead Retail Analyst at GlobalData, commented, «This year’s retail sales growth is primarily driven by inflation. Higher prices mean shoppers will have reduced purchasing power compared to last year, leading them to either opt for more cost-effective alternatives or reduce the number of gifts they purchase.»
He added, «Last year’s sales growth was bolstered by consumers drawing from their savings accumulated during lockdowns. However, with those savings now diminished by rising living costs and mortgage rate hikes, consumers are likely to approach shopping more cautiously, seeking greater value. Consequently, retailers will need to inspire shopper confidence and emphasize the value they provide to encourage spending.»
