UK shoppers are set to splurge on luxury items this festive season despite a slump in the property market and fears over mounting consumer debt.
Research published today by consultancy firm, Deloitte has revealed that Brits have a taste for the high life despite not always having the funds to pay for it.
Despite constant reports on falling house prices and bruised financial markets, the total spend this Christmas is up 7 per cent on 2006 with consumers expecting to spend on average £706 per person compared with £662 in 2006. Furthermore, internet sales are also thought to be the driving force behind the consumer spending frenzy as research from Lloyds TSB points to an average overspend this Christmas of £147 per person.
With designer handbags and shoes topping the Christmas wish list for 19 per cent of the 1,000 adults questioned in the survey, a further 16 per cent intend to shop at Farmers’ markets which will see spending exceed last year’s levels.
Technology gifts are also high up on the Christmas list this year, as are luxury food and drink items. Tarlok Teji, Head of Retail at Deloitte, comments: “This year, Christmas will go electric as consumers embrace the digital age. More people will shop online this year than ever before as the appeal of cyberspace to avoid the Christmas crush takes hold. High street players are responding to this growing trend. Our research shows a huge growth in the number of retailers providing online stores this year compared to previous years (51 per cent in 2006, versus 72 per cent in 2007).”
According to the study, spend on gifts will rise by 2 per cent per person from £378 in 2006, to £385 in 2007 which is a significantly bigger rise than expected following the turbulence of the UK economy in recent months.
However, UK consumers appear to have brushed off economic concerns. When surveyed in mid-September about how much they planned to spend at Christmas, consumers predicted their total Christmas spend would reach £706 per person. Yet when surveyed again in the first week of November, consumers provided an almost identical response to their pre-credit crunch estimations of £712 per person.
Deloitte’s Richard Lloyd-Owen adds: “With confidence in the labour market people feel secure in their jobs and the general sentiment is robust. Signs of a housing slowdown could affect consumer sentiment and the credit crunch has made lenders reticent which puts a squeeze on the availability of credit and loans.
“Despite this, there’s little evidence of household cut backs. The impact of the credit squeeze could play out in coming weeks when events have had time to percolate through consumer mindsets, but we think it’s unlikely.”
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