Rising prices will hold back electrical sales this Christmas

Price increases will deter shoppers from spending on electricals over the Christmas period, according to new research.

Figures from GlobalData have forecast that consumers may opt to “trade down” on electrical items this Christmas as real income continues to decline.

As Black Friday continues to become a more established event in the British retail calendar, GlobalData retail analyst Eleanor Parr has claimed that a higher proportion of those who plan to buy electrical goods may purchase these over the Black Friday period, pulling forward Christmas spending but at lower prices.

However, despite a tough seasonal period, Ms Parr anticipates strong gifting sales in the home audio market, which will be fuelled by the increasing demand for smart speakers.

Amazon has launched its second-generation Echo speaker in time for the Christmas period, which boasts better technology and a more aesthetically pleasing design.

Google also launched its own smart speaker – Google Home – in March this year, with a mini version recently launched in October, which Ms Parr said would “further encourage sales” in this category.

“As retailers continue to educate consumers on the benefits of ‘smart living’, more consumers will be adding smart appliances to the top of their Christmas lists,” she said.

Overall, non-food retailers are expected to struggle this Christmas, with sales forecast to show year-on-year growth of just 1.2 per cent on Q4 2016.

Volumes are expected to fall by 0.1 per cent as prices increase, which was a result of the weakened pound, and will discourage “cash-strapped” consumers from shopping over the seasonal period.

Ms Parr claimed that weak sales in Q4 may entice more retailers to take part in Black Friday this year, although this runs the risk of bringing forward sales that may otherwise have been made at full price.

The online channel is expected to continue to outperform physical sales growth.

GlobalData has forecast that total retail sales will increase by 1.9 per cent in the fourth quarter.

Despite being up on the 1.5 per cent recorded in the previous year, this will be driven entirely by inflation, as volumes are predicted to remain flat, compared with the 1.3 per cent growth in volumes seen in Q4 2016.