UK Retailers Are in Christmas Crisis Mode

The race is on to persuade cost-conscious holiday shoppers to spend earlier than ever

With double-digit inflation creating a cost-of-living crisis in the UK, retailers are rolling out Christmas offers earlier than ever this year.

The UK is rife with deals as retailers mimic the moves of such US chain-store giants as Target Corp., kicking off the festivities in September and October. With inflation near the four-decade record of 10.1% set in July, British department store chain John Lewis Partnership Plc and the UK’s biggest supermarket, Tesco Plc, are among those trying to persuade holiday shoppers to spread their spending over a longer period.

The push may be working: American Express estimates that more than 16 million UK adults have already started making Christmas purchases. But with consumers facing higher bills for such essentials as food and heating, and as rising interest rates threaten to push up mortgage costs, Christmas wish lists are getting pinched.

American Express expects some shoppers to forgo luxury goods and put low-margin essentials under the tree. Basics like soap and kitchen utensils may be more in demand.

Christmas season is crucial to UK retailers. Sharon White, chair of John Lewis, said in a September earnings statement that most of the company’s sales are heavily skewed to Christmas, with most of our profits coming in the last quarter.” Yet more than half of Britons expect to spend less this holiday season, and 1 in 10 says they’II cut spending by 50% or more, according to a recent survey from market researcher QuMind.

In late September, John Lewis removed the minimum spend on click-and-collect orders and started applying its Christmas returns policy, allowing customers to exchange or return items until Jan. 28. The company said sales of Christmas trees were up 37% compared with last year, while purchases of baubles and decorations have grown tenfold.