Christmas shoppers 'undeterred'

Low interest rates mean some consumers have not felt the pinch

Christmas shoppers will spend as much this festive season as last year despite the UK remaining in recession, Deloitte has predicted.

However, the accountancy firm said that the impact of job losses and higher taxes would mean spending is likely to be squeezed at Christmas next year.

People were cutting back on daily indulgences such as snacks, and taking more care over their shopping, it said.

A separate report suggested Christmas shoppers were turning to the internet.

The research, carried out by the Centre for Retail Research for comparison site Kelkoo, found that 20p in every £1 would be spent online this Christmas - a rise of 24% on the previous year.

Changing habits

The Deloitte report found that people were not reining in their spending too much this Christmas owing in part to the savings they have been making on their mortgages at times of low interest rates.

A good Christmas will improve retail profitability, stimulate the economy, create jobs and increase consumer confidence Bruce Fair, Kelkoo

However, it suggested that consumers were shopping around more and were showing less brand loyalty than previously.

"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," said Tarlok Teji, UK head of retail at Deloitte.

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

Recovery?

The report for Kelkoo predicted that 50% of purchases for Christmas will be made online by 2015.

Bruce Fair, the company's managing director, said that the retail sector would be a good signal of whether the UK economy was recovering.

"A good Christmas will improve retail profitability, stimulate the economy, create jobs and increase consumer confidence," he said.

"If the country suffers another poor Christmas, some retailers will fail to survive the blow and it will indicate that economic prospects for the next year are likely to be limited."