Shoppers to go on a record £20.3bn Christmas spree

The warehouse at the Amazon fulfillment centre

The group said its research found 19 per cent of shoppers plan to spend more on food and drink over the Christmas period compared with last year, a trend which it said could be positive for the likes of market leaders Tesco and Sainsbury’s.

IGD said 18 per cent of shoppers plan to spend more on their Christmas meal and a quarter will spend more on Christmas presents.

“British shoppers are feeling more upbeat about Christmas spending this year,” said Joanne Denney-Finch, IGD chief executive.

“A growing number of shoppers are prepared to loosen their purse strings, and yet this is counterbalanced by the widespread awareness of how to spend less, for instance by researching online and shopping around.

“People are increasingly expert at hunting down the best value. So although we expect a boost to Christmas food and grocery sales, we believe it will be just a modest one.”

IGD said shoppers will continue to reap the benefit of a protracted period of deflation, with falling commodity and energy costs combining with “ferocious competition” in food retailing.

The result has been 16 consecutive months of falling food and drink prices, which Ms Denney-Finch said was unheard of in the post-war era.

She said that the increasing popularity of discount retailers such as Aldi and Lidl will also have an impact on Christmas shopping.

“Seven in ten (69 per cent) shoppers say they’ll use food discounters this Christmas,” she said.

“We forecast that discounter sales will hit £1.7bn for the five weeks between November 20 and December 26.

“Beyond saving money, shoppers also cite the quality of products, the new products available and the opportunity to buy items unavailable anywhere else, as reasons for shopping in discount stores.”

Both Aldi and Lidl have made a big push to increase the quality of their merchandise.

IGD said that well over half of shoppers (56 per cent) say they are going to visit two or more stores on the same trip to buy their food and groceries at Christmas.

“Supermarkets will remain by far the most popular destination but discounters, specialist stores such as butchers and off licences and convenience stores are also favoured by many,” said Ms Denney-Finch.

“People are shopping around and spreading their spending across a growing number of formats.”

Consumers have seen a pick-up in wages, falling prices for goods and record-low interest rates. Yet they have so far proved reluctant to spend much more on groceries, with sales up just 0.5 per cent in the 12 weeks to November 8, according to Kantar Worldpanel data, partly due to falling prices.

IGD predicts that online grocery sales will also receive a boost.

“Substantially more shoppers expect to do a big Christmas shop online this year compared to last: 17 per cent compared to 14 per cent. Overall, half of shoppers (50 per cent) intend to buy some food and groceries online, including via click and collect,” said Ms Denney-Finch.

The top reasons for shopping online are to avoid the crowds and to save time. IGD said online will generate £1.2bn of grocery sales this Christmas.

Amazon said it is looking forward to a bumper Christmas and is offering its lightning deals throughout December which knock 40 per cent off prices.

Nic Sweeney, regional operations director for Amazon, said the firms believes big sellers this Christmas will be the Kindle Fire tablet, the Fire TV Stick streaming media player, cookware, perfume, aftershave, toys, the Sony Playstation 4 and Xbox One consoles and Star Wars toys.

“We are seeing record sales this year,” she added.

Much of Amazon’s products will be shipped from its two fulfilment centres in Doncaster.