High street and online shops may slash prices this Christmas as they face a slump in festive spending

• Consumer research predicts a 13 per cent decline in total Christmas spending

High Street and online stores face having to offer big sales with deep price cuts to turn around a slump in festive spending.

November retail sales have dipped, despite Black Friday, and consumer research predicts a 13 per cent decline in total Christmas spending – taking it down £3billion to £20billion.

Families are prioritising festive food and drink, however there is less demand for expensive items like jewellery, watches, tech and electricals.

Retail analysts are now predicting deep discounts, while the British Retail Consortium (BRC) says its members are banking on a ‘last-minute flurry of festive frivolity in December’.

New figures from the BRC show the total value of retail sales increased 2.7 per cent in November compared to last year.

November retail sales have dipped, despite Black Friday. Pictured: Shoppers make their way down Oxford Street

This increase is largely the result of inflation which masked the fact that the volume of purchases was down.

Paul Martin, UK Head of Retail at KPMG, predicted big sales in the coming weeks.

‘With the clock ticking down to Christmas, sales growth in November remained weak at 2.7 per cent, despite a big push from retailers around Black Friday deals,’ he said.

‘Food and drink, health, personal care and beauty categories continued to drive growth whilst jewellery and watches saw the biggest decline in sales on the High Street, suggesting consumers are abandoning expensive presents in favour of more budget-friendly gifting.’ 

He added: ‘Price remains the main purchasing driver, so we are likely to see a prolonged and well-targeted period of discounting as retailers compete hard for a shrinking pool of spend and will need to clear stock.’ 

Chief executive of the BRC, Helen Dickinson, said: ‘Black Friday began earlier this year as many retailers tried to give sales a much-needed boost in November.

‘While this had the desired effect initially, the momentum failed to hold throughout the month, as many households held back on Christmas spending.

Retail analysts are predicting deep discounts, while the British Retail Consortium (BRC) says its members are banking on a ‘last-minute flurry of festive frivolity in December’

‘Retailers are banking on a last-minute flurry of festive frivolity in December and will continue working hard to deliver an affordable Christmas for customers so everyone can enjoy some Christmas cheer.’ 

Research by accountants PwC found almost one in five people – 18 per cent – expect to spend less this Christmas.

Its figures suggest that those people who are spending will splash out an average of £400 per head, which would be down £40 on a year ago.

Financial pressures account for the top three reasons amongst those expecting to spend less. 

Some 48 per cent have less to spend, 43 per cent blame the cost of living and 30 per cent are less confident about their personal finances in the coming year.

PwC said families are prioritising spending on their Christmas dinner, together with other festive food and drink more. By contrast, homewares, electricals and technology are of less importance.

Lisa Hooker, PwC’s consumer markets leader, said: ‘The bad news is that consumers predict they’re going to spend less this year on Christmas presents and festivities.’ But, she said there is still time to turn this around, adding: ‘We are cautiously optimistic for a late surge in spending’.

She added: ‘With the cost of living in the back of many consumers’ minds, successful retailers will enable shoppers to trade down and save money within their store, while allowing customers to treat themselves and celebrate the festive season at the same time.

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