Europe June 4, 2010, 1:10PM EST

How the World Cup Will Affect U.K. Retail

The quadrennial soccer championship typically drives shoppers into stores for TVs, jerseys, and beer, but some businesses will likely lose footfall to football

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It is billed as a business bonanza. Over the next few weeks, England football fans will splash out with wild abandon, buying everything from replica shirts to World Cup-themed pizzas and cases of beer as they follow their team's progress in South Africa. The tournament is traditionally seen as providing a massive boost to UK Plc – but for retailers, publicans and even gambling companies, is the game anything more than zero sum?

The retail sector could certainly do with a lift, with consumer spending at its lowest ebb since the depths of the recession. The Confederation of British Industry's most recent Distributive Trades Survey found that 18 per cent of retailers reported falling sales in May. But some analysts doubt whether sales will really rain in with the goals as the World Cup build-up reaches fever pitch. Neil Saunders, consulting director at Verdict Research, said: "Generally the World Cup is beneficial, but not hugely so. It is a nice fillip over a short time but not the game-changer people think. Often the boost in certain parts of the industry comes at the expense of others."

When Verdict carried out a survey during the last World Cup, almost 10 per cent of people questioned said they were planning to buy a new television set, while 4.5 per cent said they would buy a new sofa. DSG International (DSITY), the owner of Currys and PC World, is certainly hoping for a footballing boost. The group's finance director, Nicholas Cadbury, said recently: "What a World Cup will typically give us is a Christmas-style peak, just in TVs."

Paul Molyneux, who runs the UK arm of the Japanese electronics giant Sharp (SHCAY), said it had not yet seen a significant increase in customers upgrading televisions just for the tournament "but we expect it to pick up in the next few weeks." For TV sales, however, he said it really was a zero-sum game, adding: "The World Cup tends to bring demand forward. If you look over the 12 months, the tournament doesn't actually grow the market as a whole."

That hasn't stopped Freeview, the free-to-air digital TV platform, from heavily promoting its high-definition set-top box in the hope that the World Cup will boost demand.

The football could also prompt viewers to upgrade to higher quality LED screens, but there is a big downside for Britain's retailers, too. "Footfall on the high street goes down and will suffer from several of the matches being on Saturdays," said Mr Saunders, recalling that average footfall fell 23 per cent during England's first World Cup game in 2006. He predicted that DIY would be hit particularly badly, saying: "The purchasing profile is overwhelmingly men, which happens to be the same demographic as those who watch football."

Sales of men's clothing could drop but may be balanced by an uplift from women going shopping to avoid the tournament. However, the big winners will be the supermarkets, said Mr Saunders. "They will put the biggest promotional drive behind the tournament, often taking a hit on margins to shift more volume," he explained.

M&S (MAKSY) has signed up to make the England team's official suits. Tesco (TSCDY), the team's official supermarket, expects to sell 800,000 England flags. If England wins, Sainsbury's (JASIY) will refund customers who bought one of its Toshiba TV sets.

The British Retail Consortium (BRC) said that the last World Cup, held in Germany in 2006, generated about £1.25bn in extra spending across the retail sector, although that compared with total spending, of £286bn, so the sum was not really a game-changer.