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Two weeks in retail - 21st November

With little over a month until Christmas shoppers seem to be finally hitting the shops with shopping lists in hand.

As ever it is John Lewis who is leading the pack. In its latest trading update for the week ending Saturday November 17 it said the sales across its 39 department stores rose 7.6% on the same week last year, up to £91.7 million. It attributed much of the rise in sales to parents getting in early for must have toys such as Furbys, scooters and children’s technology items.

Meanwhile premium watches and handbags, which were the highest sellers in the womenswear category, showed even the men are shopping early for their partners.

John Lewis also revealed that online sales are already up 31% year on year with its peak trading week expected within three weeks.

The latest figures on internet shopping from IMRG showed that £6.7 billion was spent online in October – a year on year growth of 14% and 5% up on the previous month. Gift buying rose by 62%.

The figures, taken from the IRMG Capgemin e-Retail Sales Index, published earlier this fortnight, also showed that mobile commerce has grown – up 261% year on year. During the two week Christmas shopping peak IMRG expects shoppers to spend a total of £4.6 billion. Around one fifth of online orders are expected to be via mobile channels this year.

On the high street however it was a gloomier picture. The latest BRC/Springboard footfall and vacancies monitor for August to October showed that shop vacancies have hit a new high since the monitor was launched in July last year with the national town centre vacancy rate (comprising high streets and shopping centres) up to 11.3%.

The figures combined with a 0.4% fall footfall in the three months to October – although it was a less dramatic slide than the 3,3% fall the previous quarter.

The BRC used the figures to call on the Government for a rates freeze next year.

Their figures came only days after the Office of National Statistics revealed that October had seen the worst sales growth this year – up only 1.6% in terms of the total value of sales in October compared to a year ago. The figures were a reflection of the BRC’s figures from the week before but had followed an encouraging September.

Shoppers remain nervous. There have been two inflation measures in the past two weeks both showing rises. The Consumers Prices Index from the Office of National Statistics showed annual inflation had risen from 2.2% in September to 2.7% in October.

The latest figures from the BRC-Nielsen Shop Price Index for October showed shop price inflation had risen to 1.5% in October, up from 1% the month before. Food prices in particular are being impacted by poor harvests, rising production costs and previous commodity cost rises coming through. Experts have warned that despite the rises inflation is being kept low through voucher and discounting activity.

Forecasting how retail sales will pan out over the next few weeks is a tough job but market research company Mintel has forecast a growth in UK retail sales of 3% for December. Mintel pointed out that last year saw a marked late rush from shoppers. However the market research firm claims the run up to this Christmas is starting better than last year with a slight rise in consumer confidence, falling unemployment and a reduction in the squeeze on incomes.

Mintel’s director of retail research Richard Perks, said: "Retail sales growth has averaged around 3% so far this year and as the pressures on consumers are, if anything, easing there is no reason to suppose that that rate cannot be maintained. So 3% should be the median forecast."

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