As retailers across the Midlands prepare themselves for the busiest trading period of the year, business advisory firm Deloitte forecasts that retail spend in the UK during December will be up by 0.5 per cent compared with 2008.

Research conducted by the firm, as part of its annual review of the retail industry, found that more than three quarters (78 per cent) of consumers across the country have increased their spend on essential items such as food and other groceries this year compared with 12 months ago.

Unfortunately for some retailers, 'wants-driven' spending has taken a bigger hit, with 45 per cent of those surveyed spending less on clothing and footwear and 50 per cent cutting back on entertainment and leisure spend.

In the Midlands, 83 per cent have increased their spend on food and groceries, while around half will be spending less on clothing, and entertainment and leisure (50 per cent and 53 per cent respectively).

Jane Whitlock, consumer business partner at Deloitte in Birmingham, said: Consumers remain extremely resilient and have already displayed a bedrock of fundamental confidence by continuing to spend. But 2010 is going to be just as tough as 09. Rising unemployment and increased taxes mean the forecast for total retail sales is that they will fall slightly, by 1.5 per cent. However, this is a strong performance in the circumstances."

The Deloitte report, The Retail Review: Changing Habits, Shifting Patterns, reveals that the way in which consumers shop has changed for the long-term.

According to the research, 64 per cent of people in the Midlands have cut back on daily indulgences such as snacks or coffee, compared with last year. Sixty-six per cent have reduced the number of impulse purchases they make, whilst 53 per cent say they more regularly seek out vouchers before shopping for food and other groceries. As further evidence of greater spending control, 70 per cent of shoppers in the region say they are more aware of what they spend their money on compared with 12 months ago and 58 per cent buy cheaper or non-branded products.

While it may be assumed that these changes are a temporary response to the downturn, 60 per cent of consumers in the Midlands say they have changed their shopping habits for the long-term.

Ms Whitlock said: "Consumers in the Midlands are gravitating towards the grocers. The increasing number of budget or own-label products has been a winner for the supermarkets who have also taken over from traditional high-street chains as the country's biggest clothing retailers. Now more than ever, non-food retailers need to focus on the relevance of their products and differentiation from their competitors.

"In the immediate future people remain cautious about their spending power, but there is something more fundamental at play here too. These changes in behaviour have not happened suddenly, they have evolved over a period of time and mostly before the 'credit crunch'.  So talk of a 'new consumer' in our view is over done. The digital age has made information available 24/7 and now, anyone with the internet has the ability to research products, prices and opinions and with mobile technology this can be done on the go. This has created an unprecedented level of transparency. 

"The history of retail in the UK shows the balance of power shifting over decades from the Government, to the manufacturers, to the retailers. And now, it is very much with the 'smart shopper'. Retailers will need to adjust the way they interact with these smart shoppers and serve them."

Ms Whitlock said that retailers across the industry will need to focus on improving their selling and customer service skills. 

"The past decade has not always required retailers to excel in this area, but that has changed," she said.  

"In some cases, retail portfolios need urgent attention following a period where the pursuit of floor space without rigorous customer insight has left many retailers with poor performing branches.

"There are opportunities too though. Cross-border retailing has always proved difficult but the saturated market at home means that the growth of emerging economies is a compelling prospect.  Retailers are also well positioned to exploit their brand value by broadening their product and service offering, with financial services one area of potential interest.

"However, most retailers' business models were forged in the context of strong and growing demand and a consumer led boom. It is time not just to re-evaluate the business forecasts but to retune the business model. The retailers that are winning in these challenging times and show signs of breaking away are those that are meeting most of the trends we have identified.  Those that are only doing one or two things are likely to be left behind."