Retail sales to dip in 2010

Thu 05 Nov, 2009 09:30

LONDON (Reuters) - Retail sales will be flat over Christmas and will fall 1.5 percent in 2010 as rising unemployment and taxes take their toll on consumer spending, business advisory firm Deloitte forecast on Thursday.

Deloitte said its research showed shoppers were gravitating towards supermarket groups and that non-food retailers need to focus more on differentiating their products, and improving their selling and customer service skills.

Richard Hyman, Strategic Retail Adviser to Deloitte, said the forecast 0.5 percent rise in December retail spending compared with the same month last year was a resilient performance in the context of a deep recession.

But next year "expected increases in unemployment, the impact of higher taxes and increased National Insurance payments will take their toll," he said.

Deloitte found 78 percent of Britons are spending the same or more on food and groceries, while 45 percent are spending less on clothing, 59 percent have cut back on daily indulgences likes snacks and coffee and 60 percent have reduced their number of impulse purchases.

"Consumers are gravitating to the grocers," said Deloitte's Head of Retail Tarlok Teji. "The increasing number of budget or own-label products has been a winner for the supermarkets."

Deloitte said 52 percent of shoppers think their spending habits have changed for good, stepping up the pressure on non-food retailers to improve their offer and branch into growth areas like emerging markets and financial services.

(Reporting by Mark Potter; Editing by Jon Loades-Carter)