Christmas 'no worse' for two-thirds of retailers

13th Dec 2010 10:33

Shopaholic Britons aren't expected to let a bit of snow and economic hardship ruin their Christmas, and almost two thirds of retailers are predicting business will be at least as good as last year.A new survey by the British Retail Consortium (BRC) reveals that 35% of companies think retail sales in the run-up to Christmas will be better than last year. Some 29% reckon it will be the same.More discounts are being used to fill the high street, with 41% of retail firms forecasting an increase in the level of discounting and promotions over the next few weeks, and 47% the same as 2009.The rise in VAT from 17.5% to 20% on 4 January is also expected to get the tills ringing. Seventy-one per-cent of shop owners hope consumers will bring forward purchases to beat the increase.But that could lead to a gloomy January, with 82% expecting an adverse effect on sales at the start of the new year."It's reassuring to see a majority of retailers believe Christmas sales will be at least as good as last year even if a third say they will be worse. But, considering inflation is now at 3.2 per cent, growth of anything less then that would be a real-terms fall," Stephen Robertson, BRC director general, said. "Promotions have hit a new level of intensity, retailers believe the next VAT rise is bringing sales forward and Christmas is usually a time when people spend despite their economic worries but ultimately December could prove to be the ninth month in a row of weak year-on-year growth."Last week's numbers from electricals retailer Kesa, HMV and computer games group Game proved that conditions are still tough and the next few weeks could be make or break for many.John Lewis appears to have no such problems. Sales in the week to Saturday leapt 17% to £121m and online sales soared 45%."The buoyant John Lewis sales figures boosts hopes that retailers may still have a decent Christmas after all despite the hit to activity from the bad weather," said Howard Archer, chief UK economist at IHS Global Insight. "One proviso is that in recent times John Lewis have been comfortably out-performing the retail sector as a whole."And retail giant Tesco is pushing harder than ever this Christmas at the expense of its rivals. The supermarket is selling the Apple iPad and Xbox Kinect in direct competition with the traditional high street games retailers.