Member Article

Retail health “deteriorating?

Tuesday morning’s figures from the British Retail Consortium confirmed sales growth in November was the weakest for six months.

UK retail sales values were 1.6% lower on a like-for-like basis from November 2010, when sales had risen 0.7%.

Even online retail fell back in November, after picking up in October. Sales were 8.6% up on a year ago, the weakest since March, and half the previous November’s increase.

Some shops have kick-started the traditional end-of-year sales early, with promotions and discounts intended to shift accumulated stock.

Stephen Robertson, Director General, British Retail Consortium, said: “There’s a worrying lack of cheer in these figures. The weakest increase in sales for six months suggests consumers are keeping a tight rein on their spending, despite Christmas being so near.

“This November’s mild weather contrasted with much lower temperatures last year, hitting sales of winter clothing and footwear particularly hard.

“Consumers are not quite in the Christmas mindset yet, although stores are working to generate much-needed sales with high levels of festive discounting.

“Retailers hope that customers who’ve managed their finances carefully in recent months will still treat themselves and their families in December, unhampered by the severe weather which disrupted shopping twelve months ago.”

Rod Wilkinson, associate partner and head of corporate finance at KPMG Newcastle, held a more positive regional view.

He said: “Obviously the belt tightening will have an impact on retail, although in the North East, people traditionally like to spend money at Christmas, and I think this will continue.

“In the North East we have strong performing centres such as Eldon Square, and the MetroCentre, which continue to make themselves attractive to consumers.

“I held a a dinner with retailers recently, and the talk around the table was not overly pessimistic, but there was an air of caution.”

Nationally, as the High Street is concerned that it will lose out on sales to online competition, the level of Christmas promotions is said to be on a par with “panic sale” levels of 2008.

Online shopping association, IMRG, expects consumers to spend £7.75 billion in the run-up to Christmas.

Speaking on BBC Breakfast, Ellen Flood, Director of [Shopow](http://bdaily.co.uk/member/content/stories/edit/retail-balance-continues-to-tilt-online/ http:/www.shopow.co.uk/), said: “The peak in online Christmas sales has been brought forward to this week, a whole 21 days earlier than expected.

“The recession and strong demand from consumers hunting for deals online has lead to an all out price war, with many high street retailers losing their nerve in light of plummeting profit margins.

“There is a huge concern that they will lose out on business to the online retails as they hunt for deals.

“We are experiencing a huge surge in demand from consumers hunting for deals and bargains on Christmas presents, we expect a record rise in online spend this Christmas forced in part by the recession and by ever tightening purse strings; creating a an all out nation of bargain hunters.”

Helen Dickinson, Head of Retail at KPMG, said: “The latest figures prove once more that the health of UK retailing is deteriorating.

“Christmas is a crucial trading period for the UK retail sector but this year many retailers will be nervous and unsure as to how the season will pan out.

“Cash-strapped consumers continue to be reticent and last week’s gloomy economic forecast by the Chancellor won’t help to boost confidence levels.

“December will require some tough decisions for a number of retailers as they struggle to plot a path in such challenging conditions.”

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