Shoppers on Regent Street in central London.
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LONDON – The coronavirus crisis has posed major challenges for many retailers this year. The holiday shopping season was seen as the last chance to generate much-needed sales.
In the UK, as in many other countries, December is usually the best sales month of the year. However, amid one of the worst economic crises in history, there are concerns about how the sector will perform.
However, experts have told CNBC that UK retailers are optimistic for at least three reasons.
“Of course, many people will have financial problems as a result of the pandemic, but cash flows will have improved significantly for many other households across the UK as they were forced to spend less on travel, commuting and going out and many will have taken advantage of this.” Opportunity to build her savings and pay off her debts, “said Amisha Chohan, a stock research analyst at investment management firm Quilter Cheviot.
The UK household saving rate, the percentage of money people save and not spend, rose from 9.6% in the first quarter to 29.1% in the second quarter, according to the Bureau of National Statistics. This was a record since the data began in 1987.
“There is real optimism that this forced saving will ensure that there is some catching up to do in the weeks and months to come,” said Chohan.
Data from the UK Bureau of Statistics showed that consumers spent around £ 82 billion in November and December 2019. However, due to pent-up demand, the UK Retail Consortium, a trade association, has announced that sales will “exceed” last year’s sales.
Shopping baskets might look a little different this year.
“People have more time, so they have adopted new habits and that will bring some sales,” Jat Sahi, director of retail advisory at Fujitsu, told CNBC last month.
Fitness equipment, puzzles and board games, for example, were among the most popular items in the UK ahead of the second lockdown in November, data from eBay showed.
“We use our homes differently to make them more comfortable,” Sahi said, suggesting that housewares are also likely to be the first choice for consumers who expect to work from home, at least for the foreseeable future.
Back in the holiday season, music and movies, as well as books and computers, were the top three items bought as gifts, according to the Bank of England. At this time of year, new clothes were also the first choice for many consumers.
“Clothes are facing the biggest problems because people don’t go to Christmas parties,” Jonathan Pritchard, retail analyst at Peel Hunt, told CNBC on the phone.
It’s not just what consumers buy, but how they shop, which is likely to be different this Christmas.
Retailers have seen online sales spike in the aftermath of the pandemic as consumers have been forced to stay indoors. This trend is expected to continue over Christmas as many UK cities still have social restrictions.
According to eMarketer, a data company, UK consumers will spend £ 141.33 billion on online purchases for all of 2020 – a 34.7% jump from last year.
‘We deserve it’
“It’s an emotional thing. We’ve been in lockdown for so long, we deserve it,” Sahi told CNBC about the reasons for some of the purchases this season.
Due to the pandemic, people have been prevented from doing activities, but shopping is still one of the few options they have.
Chohan also noted the willingness of people to get into the Christmas spirit earlier this year.
“There have been few reasons to be cheerful this year, and this lack of joy has encouraged many to get into the festive mood early by putting up their decorations and starting Christmas shopping much earlier than usual,” she said .
A shopper wearing a face mask on Regent Street in London after the second national lockdown ended and England has a strengthened system of coronavirus restrictions.
Victoria Jones – PA Pictures | PA pictures | Getty Images
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