UK retailers set for blue Christmas as Brexit and election loom large

The general election and continuing Brexit uncertainty will derail UK retailers this Christmas, according to GlobalData.

Total retail is forecast to grow by just 1% in Q4 2019. Patrick O’Brien, UK Retail Research Director at GlobalData, comments: “Against a low comparative of 1.3% last year, this would be the worst result since 2011 and points to how tough the current retail environment is.”

However, there is hope that the outcome of the election will give a decisive result, which could at least unlock purses and wallets in the last two weekends before Christmas. Another hung parliament pointing to further elections, another referendum or a continued Brexit stalemate, could be disastrous, though.

Online retail will continue to grow much faster than the overall market, though discounting will be rife during the period. Black Friday offers will once again start well before the main day with promotions continuing from this point up until Christmas with sales launching earlier than ever as retailers grapple for a slice of shopper spend, despite taking a hit on margins.

The food and grocery sector is forecast to do better than overall retail, but it will still be challenging with year-on-year volume growth forecast to be flat, as consumers restrict food spend to reduce overall Christmas expenditure.

Following on from a successful Christmas period last year, GlobalData expects Aldi and Lidl to continue to gain market share, both through attracting more price-focused shoppers and increasing their accessibility to consumers via wider store networks.

The grocer with the greatest expectations of a turnaround will be M&S, which experienced a disappointing decline of 2.1% in food like for like sales in Q4 2018. However, with its food division showing initial signs of improvement, the retailer will be hoping that the combination of its established quality reputation and its ongoing change in strategy to focus on value, will help steal shoppers from its Big Four rivals