Forecast data: Food, beauty and homewares retailers most likely to win this Christmas

All roads lead to the peak period for UK retailers, with this year bringing intriguing economic contradictions to consider as planning ramps up.

The Christmas Forecast report, produced by Retail Week in partnership with Lloyds Bank, Marigold and Snapchat, provides detailed insight on the sectors set to win during the year’s ultimate quarter.

With analysis of exclusive sector-by-sector forecast data from Retail Economics, the report assesses how consumers will spend this Christmas and explores where retailers should be prioritising investment to get ahead for the festive period.   

Here we take a top-line look at three sectors that can expect to see the most growth in the period.

Grocery 

Grocery is typically one of the most resilient sectors during the Christmas period.

Last year, shoppers made 488 million trips to supermarkets in the four-week period to December 24, and a record £13.7bn of grocery sales were made across the month.

With food inflation falling from 19.2% in March 2023 to 1.7% at the present time, a 3.9% rise in value and volume growth of 1.4% is forecast for the festive quarter, aligning with pre-pandemic norms.

However, food spend will still be polarised. Recovery in real income growth will help some households trade up to more premium ‘treat yourself’ ranges, but many will continue to feel challenged by economic headwinds.

Loyalty incentives, personalisation and member-only deals will help drive customer retention as price remains a key battleground.

Health and beauty 

This Christmas, 15% of consumers expect to spend more in the health and beauty category. As a result, it looks to be one of the strongest performers in the quarter.   

Sales values are forecast to increase by 3% on last year, with volumes rising by 0.5% off the back of an anticipated 2.5% inflation level in the market.

The report reveals shoppers are eager to gift family and loved ones with treats rather than functional gifts, given the tough economic environment.  

Meanwhile, social media channels such as TikTok and Instagram will continue to disrupt the market as active spaces where challenger brands propel themselves into consumer consciousness. 

Homewares 

A sector not traditionally associated with a sales boom in Q4, homewares can anticipate a rise in value by around 2.8% year on year in the golden quarter – a marked improvement on 2023 when values dropped by the same figure.   

Volumes are forecast to increase by 3.9% as retailers pass on to consumers cost savings driven by deflation in imported products.  

The success of the sector will, as ever, be closely aligned to the health of the housing market, with a sizeable chunk of consumers still embracing an ‘improve, don’t move’ mentality.   

And the growth of this sector in the golden quarter may be reflective of year-round trends to come.

Research by B&Q found that more than half (57%) of customers now buy small decorative items for their homes every couple of months – cushions and candles will be popular choices.