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Lower-price fashion to drive festive sales

Clothing and footwear offered at affordable prices are expected to outperform other retail categories this Christmas, according to a report by analysts Verdict Research and SAS.

The report, How Britain will Shop for Christmas 2011, found that shoppers will buy cheaper gifts rather than big-ticket items, but warned that sales volumes will be low and margins cut over the festive period as retailers discount to drive footfall.

Many fashion retailers will have higher stock levels than were projected for the fourth quarter after unseasonal weather led to slow sales in September.

Maureen Hinton, retail analyst at Verdict Research, said retailers must build up cash and margin from Christmas trading to support them through tough trading until the next likely boost in spending at Easter.

In contrast, the report predicted that lifestyle and premium retailers such as Jack Wills and Selfridges will perform well due to their enhanced in-store experience, brand perception and product quality. Luxury brands will continue to outpace the market over Christmas, with accessories attracting a wide audience.

Trends expected to drive sales include fur, animal prints, leather-look leggings and chunky knits. Premium footwear brands like Ugg are also expected to perform well.

Cindy Etsell, retail specialist at SAS, said the key to optimising sales is for retailers to monitor customer behaviour.

“The information that retailers have about their customers from till receipts, credit and loyalty cards, and even wider unstructured data from sources like social networks, can steer understanding of purchasing patterns and the ability to mark down prices at the optimum time to shift stock without losing significant margins,” she said.

The high street faces fierce competition from online sales. The IMRG/Capgemini e-Retail Sales Index forecasts that £7.75bn will be spent online in the five weeks up to Christmas, starting from November 28. Almost half (£3.7bn) will be spent in the first two weeks.

IMRG and eDigital Research found that 35% of people plan to do more shopping via mobile phones.

eBay has updated its 2011 projections for sales made using mobile devices, from $4bn (£2.5bn) worldwide to nearly $5bn (£3.1bn).

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