Retailers are facing a make or break week in the run-up to Christmas, as City analysts warn that a last-minute dash may not be enough to rescue a disappointing December.
Dismal footfall figures seen by City A.M. reveal that visits to high streets fell year-on-year by almost 11 per cent between Sunday and Friday last week, leaving retailers shaken and pinning their hopes on a pre-Christmas rush.
Researchers at Springboard forecast a 7.8 per cent uplift in footfall across all shopping destinations this week up until Friday as the busiest shopping day of the year approaches. But Springboard’s head of marketing and insights Diana Wehrle said this uplift in the final week before Christmas was smaller than previous years.
“There’s certainly an element of consumer confidence,” she said. “The inflation in November has risen again to 3.1 per cent, we know that wages aren’t going up anything like that and the interest rate rise last month was quite a hit. Those all mean that people are more cautious.”
Black Friday was also blamed by economists for the disappointing decline in performance during December. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said on Friday that retail sales were likely to fall by one per cent across the month, partially due to a shift in seasonal spending into November.
Richard Lim, chief executive of Retail Economics, said takeup of Black Friday in the last three years has dampened spending in December.
“We surveyed consumers and 20 per cent said they would use Black Friday to do some of their Christmas shopping,” he said. “It’s firm evidence that consumers have brought forward Christmas spending, using Black Friday at the expense of the traditional December period.”
While some consumers have already done their Christmas shopping, others are becoming more cautious due to the pressure on household income, he said, adding that the increase in inflation had “come at precisely the wrong time for retailers”.
Online sales are set to break a new record this year, but Centre for Economics and Business Research founder Douglas McWilliams said this would only partially make up for declining sales on the high street as consumers become more discerning.
“We’re still in a situation where retail sales have been rather high given income,” he said. “It’s not a collapse, it’s just that December will be weaker than some expected. Rather than taking extreme action they’re being more selective about what they do.”
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