Christmas in the balance

Retailers are preparing for the toughest Christmas in decades as they face up to the prospect of having to woo shoppers during a recession.

DSGi chief executive John Browett cautioned on Wednesday that stores face a nail-biting countdown to Christmas as consumer confidence is rocked by economic fears.

Verdict consulting director Neil Saunders warned that the retail sector will suffer a like-for-like sales decline in December as stores confront the most challenging Christmas since the early 1980s. The last time comparable store sales fell in December was 2004.

Speaking as he revealed a like-for-like sales slump of 7 per cent for the 16 weeks to August 23, Browett said that all categories at the electricals retailer had been affected by lower footfall and sales of white goods were especially hit.

“I am seeing a crisis in confidence from customers,” said Browett. He added that a fall-off in white goods would normally be associated with a rise in unemployment. Referring to the Government’s attempt this week to help beleaguered homeowners and first-time buyers, he said he welcomed any action to bolster consumer confidence.

Credit Suisse analyst Tony Shiret said: “It will be surprising if it’s not a really difficult, batten down the hatches Christmas. How many recessions have there been in the past 25 years?” He suspected shoppers would eventually spend but said: “There could be a material reining back.”

But store chiefs are not resigned to a festive write-off. Fat Face chairman Alan Giles said: “Even in really difficult times Christmas does happen, but purchasing decisions will be left late. That’s been a long-running trend but difficult times will magnify that.”

Mosaic chief executive Derek Lovelock said: “Customers are displaying they want something special, worth investing in, fashion-led if there is a strong trend – and they have displayed that they want a bargain.”

Shop Direct Group chief executive Mark Newton-Jones admitted the retail outlook was troubled, but was confident that his multichannel business would ride the downturn. He said: “It will be the end of September or beginning of October, when people have to pay their bills and see how much they have spent on holidays, when things could really start to bite.

“In terms of resilience, we are in a very different space because online is continuing to grow around 30 per cent year on year and we offer our customers a chance to spread out their payments.”