Member Article

Christmas retail outlook is gloomy

Christmas looks to be be a flat one for the retailers in the North East, as austerity measures deter shoppers.

Research by Deloittle shows that the retail sector is unlikely to see growth until at least 2013.

Paul Feechan, Partner for Consumer Business for Deloitte in the North East thinks retailers will be focusing on protecting margins over the festive period, with a view to weathering an even more demanding trading period early next year.

He said: “The prospect of entering the New Year with excess stock is unthinkable, so the majority will have erred on the side of caution in their purchasing strategy.

“Nevertheless, we are already seeing much higher levels of discounting on the high street and would expect this to increase further as retailers battle to win a share of the Christmas wallet.

“Looking further ahead, I do not see conditions improving greatly on the high street for the foreseeable future.

“Next year will be the first full year of the impact of spending cuts and it is unlikely we will start to see any real growth in sales until at least 2013.”

Andrew Coticelli, director for consumer business for Deloitte in the North East, added: “Christmas 2011 promises to be the most important moment in retail trading we have seen for many years.

“Demand has been softening throughout the year as the impact of the Government’s debt reduction strategy has started to filter through to the pockets of consumers. Therefore, it is very difficult to see where sales growth will come from this Christmas.”

He went on to highlight that cost growth is outstripping sales growth, and outside food and childrenswear, an additional 2.5% of each sale now goes to HMRC in extra VAT.

The firm also pointed out that performance of online retailing continues to excel, and forecasted a 15% increase in December, compared with the same period last year.

Mr Feechan added: “Online retailing was hit last Christmas when the massive nationwide snowfall forced some major players to stop taking orders because delivery became impossible.

“Assuming no repetition, continued growth in click and collect and increasing access through mobile phones and tablets will help boost sales. This year total online retails sales will exceed £30 billion for the first time.

“Deloitte’s research shows that the internet’s significance as a retail channel goes beyond online transactions, with more than 40% of all retail sales by value now digitally influenced with shoppers increasingly using the web for research, price comparison websites and social media recommendations.”

This was posted in Bdaily's Members' News section by Tom Keighley .