Good Christmas forecast for retailers

Retail industry leaders expect a strong Christmas trading period this year driven by a double digit growth in internet sales. According to a survey of 200 senior retail executives at Barclays sixth annual Retail Industry Forum held in London this week, over half of retailers (58%) think the prospects for Christmas trading this year are good and most retailers are positive about internet sales, which they expect to grow by more than 10%.

59% of retailers have expanded their retail space over the past 12 months and two thirds of retailers expect commercial rents to increase above the rate of inflation next year. Over 40% of retailers predict rents will increase by more than 5%. However, Barclays survey reveals that 7% of those retailers who have negotiated retail space in the past year have succeeded in obtaining monthly rather than quarterly in advance rents.

The majority of retailers would prefer rents to be based on 5 yearly reviews to the open market. A third prefer rents to be determined by turn over and only 17% expressed a preference for fixed uplifts in rents. Retailers are upbeat about the outlook for the sector over the next 12 months with over half (55%) positive and only 5% actually pessimistic about future trading. One in five retailers with an established online sales capability have reported internet sales growth of at least 10% in the past year.

More than half of retailers questioned expect to see more M&A activity in 2007 compared to this year. Paul Clarke, National Director, Retail and Wholesale sectors, Barclays says: "Strong internet sales are likely to deliver a happy Christmas for many retailers. In general, most retailers we speak to are optimistic about the crucial holiday trading season." Among the speakers at the Forum, part of Barclays focus on combining retail industry expertise with financial know-how, were Justin King, Chief Executive, J Sainsbury and David Reiss, Chief Executive, Reiss Ltd.