December 18, 2009 - Administrator

Retailers predict better Christmas this year

More than 40 per cent of retailers have predicted that Christmas sales will be better this year than in 2008, as consumers believe the worst of the recession is over, research from the British Retail Consortium (BRC) has revealed.

The BRC survey found that 42 per cent believed 2009 would be a better Christmas, and 58 per cent said that sales would stay the same as 2008. None of the retailers surveyed thought that sales would be worse than last year.

BRC spokesman, Richard Dodd, said that retailers’ confidence reflected the improved mood of consumers. “Last year, we had the aftermath of the banking crisis and a deepening recession, which put customers off spending,” he said.

“This year, people are feeling a bit more positive about their own circumstances although there are still concerns about jobs and tax rises,” added Dodd. “There is an improvement in customers’ moods and businesses are picking up on that.”

More than half the survey respondents thought that December’s sales would be boosted by customers bringing forward their spending ahead of January’s VAT increase. However, Dodd disagreed.

“This will have a modest effect on larger purchases such as kitchens and cars, but for most things it won’t make much difference because the amount that people will save is actually very small,” he said.

The BRC research also highlighted that 47 per cent of retailers expected to offer more discounts and promotions this year than in 2008. However, Dodd said it will be harder for smaller shops to afford to discount.

“Small retailers should balance any discounting they do with the need to cover their costs and make a margin across the year,” he said. “They are likely to do some discounting, but they should also look for other areas in which to compete.”

The Tenon Forum’s director of recovery, Martin Austin, agreed that greater consumer confidence could lead to better retail sales, but warned that firms must not be complacent.

“Smaller retailers need to differentiate themselves,” he said. “They should compete by concentrating on exceptional customer service, and making it a good experience for the customer to buy from them. They should have an eye-catching window display, with some special offers, and they should have a website to complement their shop.

“Firms with websites and online businesses are likely to do well in the lead up to Christmas, as people are increasingly looking online to find the best deals,” he added. “Although smaller retailers can’t offer discounts across the board, they should pick out some products to discount in order to compete with larger firms.”

UK shoppers spent £4.67 billion online in December 2008, according to the IMRG’s e-Retail sales index. IMRG also predicted that the Internet will account for half of all retail sales by 2020.