CBI: Christmas losing sparkle for retailers as shoppers go AWOL

Wednesday, 19 December 2012 01:55

An update from business organisation the CBI suggests that retail sales are down in the first half of December as consumers spend less in the vital period leading up to Christmas.

The survey shows that consumers are still reluctant to ease their purse strings even for Christmas and suggests that retailers are likely to continue to struggle in 2013.

Anna Leach, CBI Head of Economic Analysis, said:“This month’s survey hasn’t quite provided the Christmas cheer that retailers anticipated, with sales growth falling short of expectations.

“Clearly, weak spending power and uncertainty over the economic outlook are likely to remain key risks to the retail sector in 2013.”

The distributive trades survey found that a balance of 18 per cent of retailers believed sales were low for this time of year.

However, a balance of 19 per cent found that sales had grown compared to last year, but this was well down from a balance of 33 per cent in November and below analyst expectations of 25 per cent.

Of the sectors within retail, grocers and clothes saw strong improvements in year-on-year sales, up by 42 and 39 per cent respectively. The only other sector to record improved conditions over the month was sellers of consumer durables.

However, shops selling “big ticket” items for the home fared badly with retailers reporting a 58 per cent monthly drop in sales. Sports shops also fared badly.

According to Howard Archer, an economist at IHS Global Insight, one knock-on effect could be to dash hopes for GDP growth in the final quarter of the year.

He said: “This is particularly worrying news for retailers and it does not do much for overall growth hopes for the fourth quarter.”

Judith McKenna, Chair of the CBI Distributive Trades Panel and Asda Chief Operating Officer, said: “This latest data covers the period to the middle of December and we should take heart that sales on the high street have held up during the early crucial Christmas shopping period. However, on-going economic fragility is maintaining the squeeze on household incomes, and it’s notable that sales are below par for the festive season.

“So while families are making their budget stretch as far as possible for the Christmas season, the Christmas spending spirit can only go so far. In reality, sales growth has actually slowed since the Autumn and retailers are expecting a further slowdown in the New Year.”


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