Fashion and beauty retailers will be most resilient this Christmas

Fashion will see year-on-year sales value growth of 6.2% in the fourth quarter, according to Retail Week’s The Christmas Forecast report, featuring exclusive data from research consultancy Retail Economics.

This figure will, of course, be helped by high levels of inflation of 4.5% in the UK, with volumes growing by 1.7%. 

The sector will not be without its challenges, however. Consumers are expected to cut back on leisure events, impacting demand for new outfits.

Retail Economics consumer data also reveals that 11% of consumers are planning to cut back in this area as budgets remain under pressure and they instead prolong the lifecycle of garments.

The luxury sector is forecast to remain resilient, however, driven by demand from affluent households.  

The report, produced in association with CommerceHub, Elavon, Experian, Newton and Zendesk, also shows that demand will be strong in the health and beauty sector, due to the non-discretionary nature of many products within this category.

The value of sales in this sector is expected to rise by 5.9%, with volumes also rising 0.4%. Inflation is set to be 5.5%.  

The research also forecasts that 4% of consumers will spend more this Christmas in the health and beauty category, with gifting seeing a boost from consumers wanting to treat loved ones and themselves during difficult economic times.  

Retail Economics chief executive Richard Lim says there is a silver lining for the impending golden quarter: “Compared with the end of last year, the macroeconomic environment looks much more positive than we were expecting. 

“Heading into last Christmas, we had financial market instability, consumer confidence was at an all-time low – lower than the depths of the financial crisis and the pandemic – and the Bank of England predicting a long recession. It was very much all doom and gloom. 

“Fast-forwarding to where we might be this Christmas, it feels like the macroeconomic environment is going to be better, and where we are now is a lot more positive than where we were six months ago.”