Was December a success for retailers or a disaster? Well it all depends on whose figures you look at.
According the British Retail Consortium (BRC) Retail Sales Monitor UK December sales were up 2.5 per cent on a like-for-like basis year on year.
The Retail FootFall Index (RFI), however, tells another another story. They claim that year-on-year sales were down 7.8 per cent
The British Retail Consortium says that three-month trend rate of growth was unchanged from November at 1.9 per cent for like-for-like sales, and slowed to 4.0 per cent from 4.3 per cent for total sales, reflecting the continued growth of retail space.
Food sales remained strong. Both clothing and footwear picked up, helped by some colder days just before Christmas.
Furniture and big-ticket homewares improved but remained below year-earlier levels. Home accessories, textiles, toiletries and cosmetics also improved.
Trade gathered strength in the final week before Christmas, helped by colder weather.
Big-ticket purchases were mixed with consumer caution meaning many were still discount-driven
Director General of the BRC, Kevin Hawkins, said “While some retailers have performed very strongly, the average experience was broadly as we expected – not a bonanza but a long way from the disaster predicted by at least one City luminary.”
Head of Retail for KPMG, Helen Dickinson, added, “For many high street retailers much of the sales growth increase has been driven by heavy discounting in the run-up to Christmas.
“This combined with the increasing cost pressures that many are under will mean that the gap between the winners and losers will widen further and already we have seen two retail casualties in the New Year.”
Those casualties are Jessops and Next who have both reported losses.
Although Retail FootFall Index (RFI) recorded an increase in shoppers month on month by 20.7 per cent for December, it did little to improve the overall drop in footfall levels compared to 2005.
This gap has been steadily widening throughout the year, culminating in a -7.8 per cent fall in December, which represents the biggest year-on-year drop of 2006.
A dramatic increase in online shopping coupled with financial pressure is being blamed as the cause.
In many ways 2006 will be seen as a watershed in terms of a shift in Christmas shopping habits. Both multi-channel and multi-location shopping patterns are here to stay.
Director of Experian’ Business Strategies division, Martin Davies, said, “With footfall levels down on previous years, customer service and marketing will be high on the agenda for many in 2007.
“However, headline figures mask key retailers and shopping centres that have had a successful season by better understanding the shopping habits of the increasingly sophisticated consumer. 2007 will see this band of consumers increasing in number.“
Mr Davies also predicted that as consumers get accustomed to buying online or at any time of day or night at a supermarket, they will be visiting centres for different purposes and their expectations when visiting these retail outlets will get higher.
He added, “The pre-results forecasters are already talking about winners and losers this Christmas, and the Internet is already proclaimed by many as this year’s winner.
“However, the true winner must be the consumer, whose influence on Christmas 2007 is dominating the minds of UK retailers before this year’s decorations are even returned to the loft.”
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