Figures out last week from the Office of National Statistics cast more doubt over the commercial property high street’s future this Christmas.
Figures show that sales volumes were 0.4% lower in November than from the previous month, with poor sales of watches, jewellery, computers and carpets. On a yearly basis, volumes were 0.7% up on the same month in 2010.
Howard Archer, of Consultancy IHS Global Insight, said the statistics revealed it was “not a very merry start to the Christmas season for retailers.”
He further added: “It is the Christmas period that is particularly vital for most retailers and the 0.4% drop in sales volumes in November indicates that they are having their work cut out to get pressurised and worried consumers to spend.”
The drop in sales, even with a large number of special offers from retailers desperate to drum up trade was slightly higher than the City had projected and brought to an end two months of growth.
The ONS said shoppers still spent 3.3% more compared to the previous year as the effect of raw material inflation on shop prices continued to be felt.
British Retail Consortium (BRC) said it was apparent shoppers had approached the Christmas period with great caution, keeping control of their spending in November and leaving it late to start their Christmas shopping.
Stephen Robertson, Director General of the BRC, stated: “The continuing high levels of pre-Christmas discounting and promotions are another symptom of weak demand. Retailers know they need to fight hard for every pound that’s out there in the hope of attracting business which would otherwise go to their rivals.”
Mr Robertson said his members were still optimistic that shoppers will look to treat themselves and their families in the final days before Christmas.
The weak figures come at the same time a Government-commissioned report by retail guru Mary Portas signalled that the UK’s commercial property high streets are at danger from online competition, with some town centres described as “dead”.
She said it was too late to save every high street and warned that casualties will continue to rise unless action is taken to tackle the crisis.
The figures revealed non-food commercial property retailers battled against their biggest monthly falls in sales since February, while food stores saw their biggest fall for half a year.
This was in the face of strong internet demand and a recovery in clothes sales, which had been hit in recent months as the warm autumn weather encouraged shoppers to hold back on buying winter clothes.
The commercial property retail sector has fallen victim to a far-reaching consumer spending squeeze, as a result of high inflation, slow wage growth and weak confidence.
Major commercial properties including HMV, Mothercare and Carpet right have all suffered with only a small number, such as Sports Direct, resisting the trend.
There are uncertainties that some well-known commercial property retailers may well go under after Christmas as consumer’s reign back spending amidst fears of a recession.
However some commercial property retailers have reported strong pre-Christmas sales, with even the most cash-strapped shoppers determined to celebrate. But the harsh trading conditions have already claimed some victims, including commercial property shoe retailer Barratts which went into administration last week.
The ONS also followed the rapid increase in online shopping, as consumers gradually turn to the internet to buy everything from groceries to Christmas gifts. Typical weekly spending online has increased by nearly £200m in the past year, from £593m in November 2010, to £787.9m last month. It is estimated to account for 12.2% of all retail sales, exclusive of petrol.
As Portas Review suggests, the high streets are fighting a losing battle with online retailers.
Kevin Flood, CEO of retail expert Shopow said: “Figures suggest that shoppers are continuing to mover their shopping online. High street stores have had to pull out all the stops to make their shops attractive by reducing prices early and creating imaginative promotions to increase footfall and more activity at the tills. It is still far from plain sailing however as there is still a lot of pressure on the finances of every shopper in Britain-online and on the high street.”
Samuel Thomas, of Capital Economics said: “The official UK retail sales figures confirm that November was a bad month for retailers and will raise concerns that spending will be soft over the crucial festive period. What’s more, the drop in sales volumes may have been greater had retailers not resorted to another month of discounting.”
He further added: “A splurge by consumers in the final weeks before Christmas will only mean that retail spending in early 2012 is even weaker than currently seems likely.”
Meanwhile commercial property retailers are preparing for a frenzy of last minute shopping this year, as Christmas falls on a Saturday. That means there are merely three shopping weekends in December.
Shoppers will hope that by holding back they will force shops to discount their stock so they can pick up some festive deals.
A survey released last week, revealed individuals plan to spend less on presents this year than in 2003. Christmas shoppers plan to spend on average £423, five per cent lower on last year and slightly more than two-thirds of the £600 Britons expected to spend in 2001.
The study conducted by Abbey, suggests bad news for children, with everyone over 35 planning to spend less. Those aged between 55 and 64 are planning to spend £344 on average, around one-quarter less than last year. Only those aged between 15 and 34 intend to spend more this year.
Of those proposing to cut back, 39 per cent said they had made a conscious decision to cut back on the extremes of previous Christmases, with 38 per cent admitting their present finances will not stretch to previous lavish gestures.
A separate study showed that one in five Britons started saving for Christmas in August. Research by Birmingham Midshires found that on average shoppers have saved £40.73 to spend on presents during the past three months.
