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Report predicts flat festive season and 1.5 per cent drop in retail sales in 2010

Deloitte forecasts flat Christmas

Consumers are spending virtually the same on retail as they were last year, new research by Deloitte has shown.

The business advisory firm is forecasting that retail spend in December will be up by 0.5 per cent compared with 2008, but will fall slightly for the whole of 2010.

"We believe total retail spend for the final quater of 2009 will come in just below the same period last year, but the Christmas month will be slightly up," said Richard Hyman, strategic retail adviser to Deloitte. "Next year, expected increases in unemployment, the impact of higher taxes and increased National Insurance payments will take their toll on retail sales and we forecast a slight fall of 1.5 per cent in 2010.

"However, this is still an outstanding performance which reflects a bedrock of fundamental confidence that few might have expected."

Deloitte’s Retail Review also revealed that 78 per cent of people are spending the same or more on food and other groceries this year compared with 12 months ago.

However, ‘wants-driven’ spending has been harder hit – 45 per cent of people are spending less on clothing and footwear this year and 50 per cent are spending less on entertainment and leisure.

Tarlok Teji, Deloitte’s UK head of retail, said: "The increasing number of budget or own-label products has been a winner for the supermarkets, who have also taken over from traditional High Street chains as the country’s biggest clothing retailers.

"Now, more than ever, non food retailers need to focus on the relevance of their products and differentiation from their competitors."

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