Fears of a nightmare before Christmas for UK retailers as footfall and spending dip

Shoppers On Oxford Street On The Last Saturday Before Christmas
Christmas is the most important trading period of the year for most retailers (Source: Getty)

Retail analysts fear a nightmare before Christmas for British shops as figures published today show weakness ahead of the crucial holiday spending spree.

Footfall in UK retailers fell by two per cent year-on-year in October, according to figures from the British Retail Consortium (BRC) and Springboard.

The decline in the number of shop visits was the worst October in four years, and the biggest fall since June 2016. The three-month average, a key measure of momentum, is also the lowest since last June, the month of the EU referendum.

Read more: Weak sales pose threat to retail’s Christmas cheer

Separate data to be published today by payments giant Visa will show a similar picture of stuttering spending for October as unseasonably warm weather dragged sales of winter ranges of clothing and footwear to their biggest decline since 2011.

Spending decreased by two per cent year-on-year in October, while the rapid growth in online sales also moderated 2.2 per cent year-on-year.

Mark Antipof, chief commercial officer at Visa, said: “Retailers will now be pinning their hopes on strong performance around Black Friday and Cyber Monday. November’s data will therefore provide the first real clue on how Christmas is shaping up.”

Since the post-referendum fall in sterling economists have observed a slowing in consumption as inflation has rocketed, leaving wage growth far behind. The pound remains around 14 per cent weaker against the US dollar than it was two years ago.

Read more: How to solve the UK’s low wage endemic

Richard Lim, chief executive of Retail Economics, a consultancy, said: “The squeeze on personal finances is expected to be at its most intense leading up to Christmas, which does not bode well for retailers.

"The persistent erosion of spending power over the last few months has begun to take its toll and shoppers are tightening their belts."

The figures are a precursor to official government data on retail sales, released on Thursday, which are expected to paint a bleak picture of the retail landscape.

The Office for National Statistics is expected to report this week that retail sales fell by 0.5 per cent in September, the first drop for four years, according to City forecasters. Retail Economics forecasts sales volumes to fall by around 1.5 per cent over the final quarter.

Retailers' Christmas campaigns are now in full swing. Both Marks and Spencer and John Lewis put out their Christmas adverts last week, but with inflation peaking and interest rates rising, the outlook for spending over Black Friday and Christmas is uncertain. Short-sellers have been piling in to bet against Debenhams in recent weeks, underscoring the pressures faced by middle-market retailers in particular.

Read more: Short sellers pile in to bet against Debenhams ahead of Christmas

However, one potential bright spot is offered by figures to be published today which will show the number of retail store closures occurring each day has fallen to its lowest level for seven years.

In the first six months of the year, 2,342 shops opened across Great Britain, and 2,564 shops shut, representing a net 14 closures each day, according to figures released today by PwC and the Local Data Company.

The leisure sector has been performing particularly strongly, with the net number of food, drink and entertainment outlets such as coffee shops rising by 116 over the period. However, big declines in the numbers of charity shops, shoe shops and women's clothing stores were also evident.

Read more: Retail sales set to paint a bleak picture of life on the high street

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