London’s festive shoppers tighten their belts
After two holiday seasons spent without her family because of Covid-19, London-based interior designer and stylist Khaoula Karaweigh, 27, is looking forward to spending this Christmas with her loved ones.
“This year is a bit more of a treat, so I’m definitely spending more money on gifts and decorations,” she says while browsing Christmas wreaths for a client at Selfridges on a late November afternoon. Some of that extra budget will come from not turning the heating on for as long as possible. “I will buy a big blanket and a hot-water bottle instead, it’s much cheaper to heat yourself than the whole room,” she explains.
With soaring energy bills and inflation hovering above 11 per cent, many other UK shoppers are thinking of cost-saving ways of celebrating Christmas this year. Debbie May, 48, who was shopping beneath the starry lights dangling above London’s Oxford Street with her daughter Jody, 23, has lowered her gift budget from £1,000 to £600. Bushra Khan, 20, is cutting the amount of gifts she is buying for each person from five to one. “It’s just going to be too expensive, I can’t afford it anymore,” she says. Friends Carol, 72, and Diane, 75, both say they are planning to spend less, buying fewer gifts per person and, in some cases, choosing cheaper brands. “It’s definitely because of the cost of living,” they agree while browsing baubles in Liberty’s Christmas Shop.
These adjustments don’t sound radical, but they will have a considerable cumulative impact on the country’s overall Christmas spending this year. Adam Cochrane, retail and luxury equity research at Deutsche Bank, expects the UK’s discretionary retail spend will decrease nearly 5 per cent this holiday season compared with last year, the worst decline in more than 20 years.
While inflation and high energy prices are problems shared across Europe, UK shoppers will be particularly afflicted as the country struggles with a wider set of economic issues resulting from Brexit and higher interest rates. In London, Christmas shopping is expected to be disrupted by train and retail strikes.
“In the Christmas season people are going to spend more on food and groceries, but that’s mainly inflation-driven. The actual volumes that will be purchased will be falling,” says Patrick O’Brien, UK retail research director at GlobalData. “In effect they are going to pay more to get less.” According to O’Brien, overall value spending on non-food in the UK in the fourth quarter will be down 11.2 per cent, with clothing one of the areas to suffer the most.
Consumers this year have started shopping earlier, spreading the cost of holiday gifting over a couple of months. This is the case for Maisie, 27, and Alfie, 29, who have started Christmas shopping in September, “a lot earlier” compared with previous years. The young couple will only be buying gifts for children, a tradition they inaugurated after the start of the Covid-19 pandemic.
In a challenging holiday season, luxury continues to be an outlier. Deutsche Bank expects luxury goods sales in the UK to rise around 10 per cent in the fourth quarter over last year. Although their less affluent customers are cutting back, luxury companies can continue rely on the highest spenders to safeguard their sales.
“They change the product mix a little bit, so there are less entry-level products on display and they tilt their sales mix towards the higher products,” says Deutsche Bank’s Cochrane. “Secondly, if you have a higher product you put a 5 to 10 per cent price increase on it and you can offset some of the volume lost at the lower end.”
Karaweigh, the interior designer I met at Selfridges, is organising Christmas decorations for a family of wealthy clients. There will be no need of cost-savings measures there. “My clients, they are spending a lot,” she says. “For them, it’s all about luxury and big brands.”
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