Tuesday, 10 January 2012

Retail crisis looming for 2012

I don't know about you but my ridiculous overspending in December has most certainly led to a freeze on my spending this month. After investing vast sums of money over Christmas in an attempt to please all my relatives and loved ones, as well as celebrating the festive season, my bank balance has certainly taken a massive hit, meaning i wont be able to indulge in the sales or new season pieces as much as I may have liked. 
Just before Christmas I think I had managed to get bank balance sorted and had started to save for all my various friends weddings, hens and my own holidays, car insurance, birthdays etc however those savings were wiped by a massive MOT on my car, followed by Christmas so spending will be on a hold for at least the first quarter of this year....and I don't think I am alone either.....from reading this article on Wales Online today it looks like the retail industry is set for another dip in spending as people hold back on spending in an attempt to manage their finances, pay the required bills and have some money leftover to save for holidays and other treats....

Warning that December boost in Christmas sales will not 

rescue “miserable” year for retailers

A boost in Christmas sales will not rescue a “miserable” year for retailers, an industry body warned today.
Sales were more than 2% higher in December 2011 than the same month the year before, according to the British Retail Consortium (BRC) and KPMG’s key December report.
That is the best month since January 2011 – but the organisation also said the awful winter 2010 weather was a major factor in the improvement and that consumer confidence is returning to recession levels.
The BRC said retailers had suffered a “relentlessly tough year” and the solid December performance had not rescued a “pretty miserable” 2011.
Economists are forecasting that a further dip in consumer spending once the sales are over could push the UK economy into recession this year – adding to the “bleak” outlook for the economy.
The December boost was largely thanks to the improved weather, with 2010 hit by snow and freezing temperatures, as well as Christmas falling on a Sunday – giving shoppers an extra day to buy gifts.
According to the BRC’s report, UK retail sales values were 2.2% higher on a like-for-like basis from December 2010, when sales had fallen 0.3% on the previous year, having been hit by prolonged snowfall and ice.
There was also sharp growth in non-store sales, which includes internet shopping, with a gain of 18.5% on 2010 – which the BRC put down to “underlying structural growth of multi-channel retailing”.
Stephen Robertson, director general of the BRC, said: “A better than hoped-for December closed a relentlessly tough year for retailers, but these figures hinged on a dazzling last pre-Christmas week and were boosted by some major one-off factors.
“We’re not witnessing any fundamental change in customers’ circumstances.
“The comparison is with severe snow disruption a year ago. Discounting was deeper and started earlier and the vital Saturday Christmas Eve added another big trading day to the final run-up.
“Post-Christmas offers brought large numbers of shoppers out but that was generally a short-lived hunt for bargains. With discounting driving sales at the expense of margins the key question for retailers is about earnings from those sales.
“A solid December result hasn’t rescued a pretty miserable year. Whole-year figures show minimal growth in 2011.
“For many customers, economic reality has bitten again since the New Year and, with consumer confidence returning to levels last seen during the recession, 2012 is expected to be an equally challenging year.”
The BRC report found that food sales growth picked up strongly and non-food also improved, but with sales often promotion-led.
Clothing and footwear showed good gains when compared to December 2010’s weak sales.
Economist Howard Archer, of analysts IHS Global Insight, pointed to signs that consumer spending will slow in the early months of this year as consumers tighten their belts “significantly”.
“This could weigh down heavily on consumer spending in the early months of 2012 at least and increase the already high risk that the economy could contract in the first quarter of 2012,” he said.
“Consumers’ purchasing power is under severe pressure from still high inflation, muted wage growth and tight fiscal policy. Meanwhile, unemployment is now rising markedly overall and the jobs outlook is looking pretty bleak at the moment.”
Dr Archer said that debt levels continued to be high with people wanting to improve their personal finances, which is also limiting their spending power.
“The main good news for consumers at the moment is that it is very clear that the Bank of England is not going to raise interest rates for some considerable time to come,” he said.
“But even this is not good news for all consumers as net savers are suffering.”
The BRC data is the latest in a string of gloomy economic statistical releases from 2011.
Helen Dickinson, head of retail at financial group KPMG, said: “While these results must be viewed in a positive light, it must also be noted that they have come at the end of a year which witnessed declines in most non-food sectors and are against December 2010’s weak results, which saw sales badly affected by poor weather.
“Sadly no-one expects this level of demand to be indicative of the year ahead.”
Wales’ major retail centres also reported a positive December.
Gerry Hutchings, Cwmbran Shopping centre manager, said: “December was a record month for footfall, with a record week and day. The increase in total annual footfall is also impressive.
“December was extremely busy and the total of 2,114,623 was 6.5% up on last year against the national benchmark of 3%.”
Mr Hutchings said that included a record total of 480,977 in the last week before Christmas – 48,334 higher than the previous highest week.
In Swansea, Ian Kirkpatrick of the city’s Quadrant Shopping Centre, said that figures showed an increase month on month. Although there was a marginal decline in footfall compared to December 2010.
However, he said that was down to the fact that people are now entering the centre through the Debenhams entrance at the bus station.
He added: “I think the real picture is much better than the figures we have suggest.”
Richard Garratt, centre manager for McArthurGlen’s Bridgend Designer Outlet, said: “December saw shoppers out in droves seeking a wide variety of fashion, accessories and homewares.”

Read More http://www.walesonline.co.uk/news/wales-news/2012/01/10/warning-that-december-boost-in-christmas-sales-will-not-rescue-miserable-year-for-retailers-91466-30090437/#ixzz1j306l4oe

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