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Three quarters of retailers report positive Christmas sales

Economy - News

Friday, 01 February 2008

Nearly three quarters of UK store retailers (73 per cent) have reported positive like for like sales for the Christmas period.

Analysis of 48 UK retailers’ Christmas performance by the business advisory firm Deloitte reveals like for like sales increased in all categories except home and electricals (excluding games).

Average like for like sales increased by 2.8 per cent. Online retailers were the big winners of Christmas 2007 with average sales up over 50 per cent (52.8 per cent).

Consumer confidence

Richard Lloyd-Owen, Head of Consumer Business at Deloitte said that the signs indicate that the season was not as bad as first feared.

“After a difficult summer, an unexpected autumn credit crisis and fears over the economy in 2008, consumer confidence may have been knocked but desire to spend didn’t abate,” he added.

Tarlok Teji, Head of Retail at Deloitte said the figures showed that many retailers had a good holiday season.

“The vast majority are growing and in some sectors, are growing quickly. Games, books, music and video retailers saw strong like for like increases driven by significant demand in gaming,” Teji explained.

Strong like-for-like sales

Christmas 2007 was the year online shopping really came of age with an estimated 4.4 million people in the UK beating the queues for the sales by shopping online on Christmas Day itself.

Overall the large food retailers with their expanding non-food ranges delivered strong like-for-like sales.

The retailers who performed particularly well this Christmas also included those which offered convenience such as online and supermarkets.

Shops offering premium produce such as health and beauty retailers and high end Department Stores did well. Retailers of hi-tech electrical goods and video games consoles were also winners this year.

Clothing and footwear suffered more than most this Christmas and the more mainstream electrical retailers also experienced difficult trading conditions.

Electricals reported a 1.8 per cent drop in their like for like sales. Overall it is the household goods businesses which were most affected with a reported negative like for like sales average figure of -5.3 per cent.

Tougher competition

Teji added that big ticket retailers such as electrical and household goods stores are facing much tougher competition than previously, most notably from supermarkets and value retailers.

“Footwear is a heavily saturated market and fiercely competitive,” Teji said.

However, the outlook for the year ahead is one of caution.

Lloyd-Owen said that the external environment in the past decade has itself not been benign for retail but that the era of easier credit, lower interest rates, rising house prices and a stable economy is at risk.

“Retailers can also no longer rely on cheap sourcing to drive prices down. Growth is slowing and costs are rising, putting pressure on retailers’ profit margins. Retailers are being forced to run harder in order to stand still,” he concluded.

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