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Retailers continue to be haunted by ghost of Christmas Present

HOW retailers must wish for a consumer environment along the lines of that final scene in "A Christmas Carol", when the converted Ebenezer Scrooge sends a passing child to buy the expensive, giant prize turkey in the butcher's window and tips him handsomely.

Scrooge does all of this with a broad grin on his face and some hearty laughter, at least in the George C Scott version. He shows not a care in the world about spending the money on the turkey for the Cratchits - rather he is delighted to part with the cash as he strives to make up for lost time.

There is one parallel between Dickens' cautionary tale and Christmas Present for retailers. The word on the street is that many consumers are holding off from buying presents until the last minute.

However, there is also a contrast. Scrooge, as far as we are aware, paid full price for the prize turkey, and that was on Christmas Day.

While Scrooge was plagued by a sleepless night, which brought home to him the error of his desire to hoard money, consumers are dreaming of an affordable Christmas. They are blameless in this desire, having picked up the tab in recent years for the collapse of the global financial system.

Household incomes are continuing to fall in real terms, with paltry pay rises way behind inflation even at its reduced levels.

There is little sign that pay growth is about to take off anytime soon, with generous employers such as Mr Fezziwig, to whom Scrooge was apprenticed in his younger days, seemingly few and far between.

Unemployment, while it has been falling, remains elevated. And the Coalition Government's welfare cuts, and its rhetoric around these, too often conjure up thoughts of the worst aspects of Victorian times.

Against this backdrop, it is no surprise at all that the current festive trading period for retailers is so far looking more than a bit like recent Christmases past.

The most notable feature on the high streets, apart from the faces of consumers who more often look worn down than carefree, is the extent of the discounting.

There has been the usual mix of one-day "events", offering big discounts to shift stock, and the early arrival at many retailers of the traditional seasonal sales which in the old days used to start after Christmas, and certainly not weeks before.

It was interesting to observe a fall in the share prices of stock market-listed retailers on Wednesday, in spite of a survey from the Confederation of British Industry showing a return to strong year-on-year growth in UK retail sales volumes in the early part of this month.

In this context, it is important to note this seeming pick-up in December followed two months in which, according to the CBI survey, sales volumes failed to show an increase on a year earlier. And economists expressed fears about how heavily retailers might be discounting during this year's cat and mouse game with consumers.

The Bank of England's Monetary Policy Committee, at its December 4 and 5 meeting, cited signs of softening of consumer spending in recent weeks. Such a softening should come as no great surprise, given the continuing pressures on households.

Official sales data and another high street survey, published yesterday, meanwhile provided further evidence of the pressures on retailers.

Figures from the Office for National Statistics showed that UK retail sales volumes increased by 0.3% on a seasonally-adjusted basis during November. This modest month-on-month rise followed a tumble in sales volumes in October. In the latest figures, this October fall in sales volumes has been revised from 0.7% to an even-steeper 0.9%.

And a survey published by accountancy firm BDO showed that UK retailers had suffered a 2.6% year-on-year fall in like-for-like sales value in the first two weeks of December. This like-for-like measure strips out the impact of changes in retail space.

There will again be winners and losers in the retail sector this festive season, as in previous years.

However, in spite of talk from the industry some weeks ago about how Christmas Present might be more cheerful for retailers than recent past festive trading periods in terms of holding on to some more profit margin, the picture on the high street does not look any less tough.

We will be deluged in coming weeks with news of how it has all gone.

By the time it has all become clear, retailers will be wrestling with the challenge of persuading consumers to part with their cash in the dark months of January and February, as credit card bills land on doorsteps.

It remains to be seen, at this stage, exactly how this festive season will pan out for retailers.

What is certain is that consumers will remain up against it for the foreseeable future, even with UK base rates at a record low of 0.5%.

After all, while Scrooge finally loosened the purse strings, Chancellor George Osborne and his Coalition colleagues, who show no signs of being plagued by the kind of sleepless night suffered by Ebenezer, have signalled a determination to continue with their particular brand of austerity.

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