UK retailers offered fewer discounted products and cut prices less in the post-holiday season this year as consumers stepped up spending.
Shoppers in the UK spent £132 million (US$210 million) online on Christmas alone, a 29 percent increase from a year earlier, estimates by payment-processing company Retail Decisions showed. The number of UK customers on Boxing Day, the day after Christmas, increased by 19 percent, Experian PLC said in an e-mailed statement.
Retailers avoided last year’s pre-Christmas discounting by cutting inventory to “much healthier” levels, Morgan Stanley analysts said. Prices, which were slashed by as much as 75 percent this year, were down by about 50 percent on London’s Oxford Street shopping district on Boxing Day at retailers including Inditex SA’s Zara clothing chain, House of Fraser Ltd and billionaire Philip Green’s Bhs and Topshop clothing outlets.
“Last year a lot of stores were offering huge discounts on a bulk of products,” Andrew Parkinson, general manager of the Bluewater shopping center in Kent, southern England, said by telephone. “We’re not seeing that this year.”
Marks & Spencer Group PLC, the UK’s biggest clothing retailer, began offering discounts of as much as 50 percent in its stores on Sunday. Last year the company had several pre-Christmas clearance days starting in November to shift unwanted stock.
The New West End Co, the organization that represents retailers in central London’s main shopping district, expects consumers will have spent £120 million over the Christmas weekend.
“The sales will give retailers an added boost following a positive Christmas period, which saw stores trading around 10 to 12 percent up on last year,” spokesman Jace Tyrrell said.
Tony Graham, a 19-year-old student standing outside the HMV Group PLC music store on Oxford Street, said he used his Christmas voucher to buy a Microsoft Corp Xbox 360, slashed from £69.99 to £30.
“I’m totally happy my parents gave me a voucher so I was forced to wait until the sales,” he said. “They might not be as good as last year, but it’s still worth waiting for.”
The strength in Christmas trading isn’t expected to continue next year, said analysts, who added that potential public spending cuts, tax increases and rising unemployment will weigh on consumer confidence next year.
“Given the fiscal situation facing the UK, and the election timing, there are concerns that consumption will deteriorate further,” Andy Hughes, an analyst at UBS AG said.
He estimates an average same-store sales decline of 1 percent for the retail industry next year.
Market researcher Euromonitor forecasts overall UK retail revenue will rise by 2.5 percent to £332 billion next year.
“It’s not a massive increase and, in term of recent growth, it’s much down,” said Jon Wright, retailing manager at Euromonitor. “[Year] 2009 was definitely better than most people expected. For next year it’s the macro-economic conditions that really concern us.”
Meanwhile, four out of five UK retailers foresee no improvement in sales in the new year, and a third expect to cut staffing levels, an industry survey showed yesterday.
On a slightly brighter side, the British Retail Consortium said none of the respondents expected sales to decline next year, while a fifth of the sample believed sales would rise and that they would be adding staff.
Retailers said their biggest worries were weak consumer demand, rising unemployment, hikes in personal taxes and the weakness of the UK economy.
The survey was based on responses from 19 major UK retailers in the first 10 days of this month.
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