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Multiples braced for cautious Christmas

High street retailers are expecting Christmas trade to be worse than last year as a mood of “doom and gloom”, and economic uncertainty prevail.

As prime minister Theresa May this week postponed the parliamentary vote on the UK’s deal to exit the European Union, the BDO High Street Sales Tracker showed total in-store like-for-like sales declined 2.6% in November – the worst November result since 2015.

Meanwhile, Springboard has forecast that December footfall will decline 4.2% compared with last year, and PwC has predicted that customers will spend less on fashion this Christmas as they made purchases on Black Friday instead.

“Everyone is holding their breath,” said one high street supplier. “Trade isn’t great, and no one knows what’s going to happen next. There is a lot of uncertainty, and doom and gloom in the market. It certainly won’t be a record-breaking Christmas for anyone this year.”

The managing director of one footwear retailer said customer sentiment was subdued: “It’s going to be a tough Christmas. Consumers are cautious right now. They still want to have a nice Christmas, but they’re being a bit wiser and more frugal with their spending. It’s not going to be as good a Christmas as last year.”

Retail analyst Richard Hyman predicted Christmas would follow the year-long trend of poor trading conditions: “2018 has got tougher and softer as the year has unfolded, and I can’t image why Christmas should suddenly see a boost. The shape of trade will be the same. December will still be the peak month for retail sales, but it will be from a lower base.”

He added that a climate of discounting had squeezed margins and encouraged consumers to delay making purchases: “The body language of retail businesses is saying unwittingly to customers, ‘If you can hang on, we’ll panic and lower the price of this even further.’ That’s a really dangerous position to be in.

“Instead of turkeys for Christmas, it’s the annual game of chicken, when people leave it to the last minute.

“Most retailers will be going into 2019 with their cash positions adrift of where they want to be.”

One womenswear supplier said she anticipated more discounting on the high street and smaller orders in the new year as consumer spend slows: “I think everyone is going on Sale early because people are just not buying any more. Retailers are struggling and want to get rid of old stock.

“We are seeing reductions in the quantities bought and retailers are much more cautious about what stock, and how much, they are buying.”

Superdry co-founder Julian Dunkerton said the uncertainty around Brexit had had a profound effect on consumer spending: “Brexit is such a negative thing. There’s so much uncertainty. We were on such a positive trajectory and now with this sword of Damocles hanging over us, it’s so hard for people to make economic decisions.”

Helen Dickinson, chief executive of the British Retail Consortium, agreed: “The longer this period of uncertainty and stalemate hiatus goes on, it is going to have more of an effect [on consumer spending].

“Retailers need certainty on what the future relationship with the EU is going to be. If we’re heading towards a no deal outcome, the pound could fall, which could have an impact on input prices for retail.”

Readers' comments (1)

  • Multiples only have themselves to blame here. Their cowboy attitude has credited a discount culture of which nobody is strong enough to reverse.

    BREXIT has not happened yet so its impact going forward is unknown, but has no relevance in consumer spending today, so I don't know what the BRC are bleating on about. Buying a house, perhaps, but buying a dress or a pair of jeans will not change while Westminster cannot decide what to do.

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