2013 expected to be "endurance test" for retailers

First published in Business News The Northern Echo: Photograph of the Author by , Deputy Business Editor

BIG variations in festive retail sales are expected and a no-growth environment is likely to continue into next year, according to the British Retail Consortium, as a plethora of household high street names prepare to report next week.

While John Lewis reported a triumphant 13 per cent hike in like-for-like sales, coupled with a milestone online performance in the five weeks to December 29, the British Retail Consortium’s director general Helen Dickinson has warned the sector as a whole may not do so well, and this year was set to be an “ongoing endurance test” for retailers.

In the first Christmas trading update from the sector, the chain reported sales of £684.8m in the period, with total sales rising 14.8 per cent and the week leading up to Christmas seeing record sales of £158m.

The group also suggested the clearance season got off to an encouraging start after total sales lifted 11.5 per cent in the first five trading days after Christmas thanks to a record £31.7m on December 27.

John Lewis said online sales in particular helped boost figures, with johnlewis.com breaking through the £800m barrier during December after a 44 per cent rise in sales year on year.

The figures mark the start of a busy reporting period for retailers, with fashion chain Next following today (January 3) with its festive trading update.

High street bellwether Marks & Spencer reports next week, with supermarkets Morrisons, Sainsbury's and Tesco also revealing how well they fared.

And despite the department store chain’s success, Ms Dickinson said Christmas trading had not been exceptional for UK retailers generally.

"Overall, Christmas hasn't been a boom time for UK retailers but it hasn't been complete doom and gloom either," she said.

"There are big variations in individual retail performances but, when the final sums are done, total spending is likely to be up modestly on last year though only broadly in line with shop price inflation."

Customers bought similar amounts to last year, and sales were hard-fought, she said.

"Sales were hard-fought and often driven by discounts so cutting into margins, though retailers worked hard to ensure they had the right products available, whether in store or online, and at the right prices,” she said.

"Sales have not collapsed but the pressure is coming from adapting to conditions that consistently deliver minimal year-on-year sales growth. There is only so much cost cutting and new efficiency retailers can achieve."

She also warned that the ongoing endurance test for retailers of trading in a largely no-growth environment is likely to continue well into 2013.

"As we look to the New Year, utility prices are likely to edge up inflation and people are keen to continue paying down their debt, which means the amount of money they have in their pockets will remain under pressure.

“So, 2013 will be characterised by more of the same and there's every sign that the ongoing endurance test for retailers of trading in a largely no-growth environment is likely to continue well into next year."

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