Think tank predicts shoppers will spend more on less this year
Analysts report that 2011 will not be as bad as feared, particularly for high-end retailers
Sunday 30 January 2011
Shoppers will spend more this year than last as they "trade up but buy less often," according to a group of top retail advisers and analysts.
KPMG/Synovate, which is due to publish its findings this week, predicts the sector might not be hit as hard this year as first thought. The think tank's white paper, What are the prospects for UK retail in 2011, said there is "some optimism" for this year, beyond the first quarter.
This is in contrast to the gloomy outlook from the GFK Consumer Confidence index which has dropped eight points to minus 29 – the lowest level since March 2009. While the Office for National Statistics said Britain suffered the worst annual performance for any December since records began in 1988, sparking fears that 2011 can only get worse.
Helen Dickinson, KPMG's head of retail, said: "The worry since the downturn kicked-in was that retail would fall off a cliff. The past three years have provided enough evidence to show that consumers continue to love shopping and will therefore find ways to spend whatever the state of the wider economy. Consumers will spend more in pound terms than they did in 2010."
Although the think tank warned the volume of sales will be down and the increased pressure on spending will have a negative impact on many retailers, it said the most successful retailers will continue to do well.
Nick Bubb, a retail analyst at Arden Partners, said: "Real income pressure, like ever-rising petrol prices and the threat of higher mortgage rates will be felt more keenly in the mass market than at the 'John Lewis' end. We will continue to see a difference between retailers affected by the supermarket competition and those with more robust market positions."
Neil Saunders, a consulting director at research group Verdict Consulting, said: "Although the overall retail pie may continue to get slightly larger, not all retailers will receive a slice. Retailers, therefore, need to ensure that their propositions exceed customer expectations to ensure any spend which is made is made with them.
"2011 will not be the year of trading down; it's likely to be the era in which consumers seek more value for money – perhaps trading up but buying less to fund more expensive purchases."
The think tank did warn that any rise in interest rates in 2011 will be an issue for the sector.
Vicky Redwood, a consumer and debt specialist at Capital Economics, said: "Consumers face many headwinds. Inflation is likely to stay high for several months, but pay growth is unlikely to keep up. At least the Monetary Policy Committee has not been panicked into raising interest rates yet. But a rate hike will remain a threat throughout much of 2011.
"But consumers have a tendency to shrug off whatever is thrown at them. We would be wary of underestimating their resilience this time too."
- 1 Autistic adults could take pure MDMA to 'reduce social anxiety'
- 2 Stolen Instagram photo sells for $90,000
- 3 Before you complain about your GP, this is what you need to know about actually doing the job
- 4 Charlie Charlie Challenge explained: not a Mexican demon being summoned — it's gravity
- 5 Paracetamol Challenge: Mother of girl killed by overdose pleads with teenagers not to take part
Iran launches anti-Isis cartoon competition 'to expose true nature of Islamic State'
'Don't blame all men for rape' campaign backfires spectacularly
Fifa corruption arrests: How Chuck Blazer rinsed money from the beautiful game
Fifa corruption live: Uefa to consider pulling teams from Fifa tournaments if Blatter stays
Ukip MP Douglas Carswell says he felt his safety was 'seriously at risk' after he was surrounded by anti-austerity protesters
EU referendum: David Cameron's rules are a 'democratic disgrace', says French-born Scottish politician set to be denied a vote
The day that Britain resigned as a global power
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
Australian man punched in the face for defending Muslim women from abuse on train
A nation of inequality: How the UK is failing to feed its most vulnerable people
David Starkey 'tells Amal Clooney to shut up and stop over-promoting human rights'
iJobs Money & Business
£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...
£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...
£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...