Retailers expecting biggest Christmas in seven years with household spend expected to be €2,450

A festive retailing boom, fuelled by bargains and rising employment, should ensure the best Christmas in seven years for traders, according to Retail Ireland.

After years of restraint, households are expected to spend an average of €2,450 this December, approximately €600 more than any other month of the year.

Key areas of demand include electronics, fashion, footwear and furniture while growth in other categories such as books, news and stationery and grocery remains weak.

Intense competition means shoppers can expect plenty of food and drink bargains. This is largely due to the mismatch between volume growth and value growth in the grocery sector. Currently volume growth is running at over three times value growth.

“While not ideal for retailers, it’s great news for Irish consumers as they continue to hunt for Christmas bargains,” said Retail Ireland director Thomas Burke.

The expected improved Christmas spend — which Retail Ireland predicts will reach €4,050 million (€4.05bn), up from €3,920m in 2014 — is aided by shoppers having more disposable income, albeit still 10% behind 2008 levels; and a strong recovery in consumer sentiment, which soared by over 10% in the first 10 months of 2015. Employment, with 1.98 million working, is at its highest since early 2009, while goods inflation at minus 4% is keeping prices down.

Areas benefiting include pharmacy where online growth is expected to outstrip store growth, with beauty and fragrance leading the way; hardware and homeware; and department store sales, particularly menswear. Bigger ticket items like furniture and electrical are also enjoying strong growth.

The appeal of cross-border shopping has also weakened — to a quarter of 2008 levels — most likely due to the strength of sterling. An AA membership survey of over 5,500 people showed the number crossing the border for Christmas shopping fell from 27% to 7% in 2015.