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Slow start for Christmas sales season

The Christmas shopping season has got off to a slow start, with retailers reporting a fall in sales volumes in November, dampening hopes of a bumper festive period on the high street.

Figures from the Office for National Statistics (ONS) showed that retail sales volumes unexpectedly fell by 0.3 per cent in November. Department stores saw the biggest slump in sales, and winter clothing proved particularly unpopular thanks to a mild November.

Stores are holding out for a last minute rush of shopping over the coming week, but a separate survey published yesterday showed retailers are predicting shopping activity to fizzle out once the January sales are over and VAT returns to 17.5 per cent.

According to a snapshot of sentiment from the CBI, retailers are predicting gloomy times will continue.

Chairman of the CBI distributive trades panel and chief operating officer of Asda Andy Clarke said: “With a week left to go until Christmas, retailers may yet benefit from a flurry of last-minute sales and from shoppers bringing forward spending to beat the VAT rise. Although individual retailers may post healthy-looking Christmas numbers compared to the same time last year when we were in the grip of the recession, conditions across the whole of the sector are likely to remain challenging in 2010.”

Year-on-year sales were up 3.1 per cent in November, according to the ONS, compared to an annual growth rate of 3.7 per cent in October.

WHAT DO THE LATEST UK RETAIL SALES FIGURES TELL US ABOUT THE PROSPECTS FOR THE HIGH STREET?

HOWARD ARCHER | GLOBAL INSIGHT
The figures are obviously very disappointing even allowing for the upward revision to the October data, and it does raise questions as to how robust spending is going to be over the critical Christmas
period, which is worrying for retailers.

VICKY REDWOOD | CAPITAL ECONOMICS
The latest figures on UK retail sales painted a mixed picture about spending in the run-up to the festive period. It is looking unlikely to be either a bumper or a particularly disappointing Christmas.
The true test will be how spending holds up once the fiscal squeeze gets underway later next year.

BENJAMIN WILLIAMSON | CEBR
The figures are likely to take some of the shine off the expected recovery in the fourth quarter. But while the seasonally adjusted sales figures show a fall in spending in November, the non-seasonally adjusted data show typically higher sales at the start of the festive period. Christmas has not been cancelled!