Christmas spending forecast to decrease by £9.7bn, report shows

Christmas spending is forecast to decrease by £9.674bn during the six weeks leading up to Christmas this year due to the impact of lockdown, according to a new report.

The VoucherCodes.co.uk Shopping for Christmas 2020 report, carried out by the Centre for Retail Research (CRR), suggests that new restrictions meaning non-essential stores are closed until 2 December, will result in an 11.6% drop in Christmas spending compared to the same six week period last year.

Prior to the Prime Minister’s announcement on Saturday 31 October, Christmas spending was expected to increase by £1.3bn compared to 2019.

Naturally, a sharp rise in online sales is predicted due to the closure of many physical stores. Online sales are now forecast to make up nearly half (48%) of the total retail sales, growing by a staggering £12.978bn (58%) versus 2019. Offline spending is set to drop by 37% (£22.653bn) on last year but will still make up 52% of total retail sales, due to certain items being available in shops that are open such as supermarkets and pharmacies.

Online vs offline spending

 Retail sales 2019Retail sales 2020Retail sales growth (2019 – 2020)Share of Christmas spending 2019Share of Christmas spending 2020Share of Christmas spending growth (2019-2020)
Online£22.279£35.25858.2%26.8%48.0%23.1%
Offline£60.851£38.198-37.2%73.2%52.0%-28.9%

On average, Brits are expected to spend £1,049.01 per head this Christmas, with Londoners forecast to shell out the most (£1,537.89 per head). This is followed by those in the South East (£1,273.85), East of England (£1,163.25), and the South West (£1,095.28).

Regional Christmas spending in 2020

RegionTotal spending £millionsSpending per head
London£13,699.47£1,537.89
South East£11,635.37£1,273.85
East of England£7,213.34£1,163.25
South West£6,133.55£1,095.28
Scotland£5,575.28£1,025.25
North West£7,011.53£961.54
East Midlands£4,598.32£957.19
West Midlands£5,634.05£954.76
Yorkshire & Humberside£5,068.44£924.90
Northern Ireland£1,711.51£909.41
Wales £2,813.35£896.26
North East£2,361.79£888.56
Totals/Average£73,456.00 £1,049.01 

According to the report, this drop in spend is a result of the closure of non-essential shops, growing consumer fears about the future, and logistical problems that will likely be faced by online businesses trying to cater for such an increased demand. Important gifts that previously would have been purchased in-store will now be bought online including electronic goods, children’s toys, clothes and footwear.

Anita Naik, lifestyle editor at VoucherCodes.co.uk, commented: “The pandemic has without a doubt interrupted ‘normal’ life for everyone this year, so it’s no surprise that it will also affect consumer spending over the Christmas period, particularly now that shopping in-store will not be possible until much closer to Christmas. 

“With physical stores closing and people staying at home for at least four weeks, the rapid shift to online shopping is to be expected. Consumers have already started shopping for Christmas to ensure they don’t go without, and non-essential stores have been busier than they were in the run up to Christmas 2019.

“However you choose to shop, it’s worth taking into consideration that retailers will be offering extra special discounts during the Black Friday period and in the run up to Christmas, so make sure you shop around for the best deals. It’s also worth remembering that stores will be trying to fulfil much higher demand than usual online, so make sure you shop early so all your gifts arrive in time.”