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Strong online Christmas predicted

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Retailers can expect a good Christmas this year, especially if they’re selling online. That’s the judgement from Verdict Research, whose analysts say this holiday season will see the highest spending since before the recession – and all despite looming spending cuts and job losses.

In all, predict Verdict researchers, UK consumers will spend £85.2bn, £1.6bn more than last year. Online spending will account for more than three quarters of that, with growth of 17.6%, taking the total spent over the internet to £8.1bn, £1.2bn up on last year. They forecast that online will account for 9.5% of all sales this festive season. Non-food categories will see the biggest benefit, with online growth of 17.8% compared to 0.8% for all non-food sales.

Maureen Hinton, lead retail analyst at Verdict, said: “Those online is such a major factor in sustaining growth, the fact so many more retailers are now online means that even this channel is becoming more crowded and competitive. Those retailers we trust, such as John Lewis, M&S and Next, that provide a range of multichannel options for buying, delivery and exchange are the winners at Christmas, as well as specialists with unique ranges such as The White Company.

“However this switch to online does mean those retailers without transactional websites are missing out at a crucial period for the sector.”

But, warned Verdict, the extra spending doesn’t all mean more products bought, since part of the reason for the improvement comes from the rise in VAT from 15% last Christmas to 17.5% this year, while inflation is also playing a part, particularly in food, clothing and health and beauty.

Key winners in the spending rise are expected to include the supermarkets, especially multichannel operators, clothing and footwear, where prices have risen, and electricals, thanks to new products including iPads, Kindles and new video games. Health and beauty is also expected to stay strong, thanks to the “general reluctance of consumers to cut back on health and beauty products,” but DIY and furniture and floorcoverings are expected to be hit by a still slow housing market.

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