Retailers to face difficult 2011

KPMG is warning that retailers are facing a difficult year ahead after Christmas shopping was hit by a combination of tough economic conditions and sub-zero temperatures. Helen Dickinson and Tim Clifford, retail partners at KPMG, said,

”There’s no doubt that trading in the four weeks to Christmas saw a drop in like-for-like sales, with many retailers having a difficult time. Many people struggled to get to the shops because of the snow and those that did, had less money to spend than in previous years.

“Online sales continued to grow despite the difficult weather conditions but many pre- Christmas delivery slots appear to have been missed. Those retailers with the right online offer - along with out of town destination shopping centres that have better road access - have done comparatively better.

Post-Christmas sales are now crucial to December’s results. But with few panic price reductions and little more than the expected amount of discounting, it’s likely that the sales season will quickly run out of steam. Many retailers have been carefully managing their stock positions to protect their margins where possible, in the expectation that Christmas 2010 would not be a blockbuster, irrespective of the weather.

‘’The industry knows it is in for a tough year ahead. As well as the VAT rise, customers are tightening their belts because they’re worried about prospects for their own jobs and personal finances in what are likely to be tougher economic conditions in 2011.”

Image: UK High Street