Buoyant Christmas trading goes soggy

A mixed picture of retail fortunes emerged yesterday with better- than-expected official data on November's high street sales and an upbeat consumer survey on Christmas shopping being tempered by reports from some shopkeepers that sales had slowed considerably in the past two weeks.

Nick Bubb, retail analyst at stockbrokers Mees Pierson, said: "I think Christmas will end well but in the last couple of weeks things have gone soggy. The mood in the industry has changed from one of great confidence to one of gloom."

Analysts say that even larger retailers, such as Marks & Spencer and Next, have experienced a slowdown in sales.Smaller shopkeepers are finding the going particularly tough.

Official figures released yesterday showed that high street sales jumped by 0.7 per cent last month, taking the annual growth rate to 3.9 per cent. The figure came as a surprise following subdued survey results from the British Retail Consortium and the CBI.

The most buoyant area has been household goods, up 2.6 per cent during September-November. There was also a 1.7 per cent increase in department store sales.

In year-on-year terms, clothing and footwear have seen the biggest gains. Recent price increases hit sales in September but they have since picked up smartly. Food sales continue to climb after a very subdued performance earlier in the year. The only weak spots were the non-core areas of mail order and "other" stores.

"The momentum behind high street spending is eroding consumers' sensitivity to price increases," said John O'Sullivan, an economist at NatWest Markets.

A new report from Verdict Research said Christmas trade would be the best for eight years although it would not result in an Eighties-style boom. It is predicting a year-on-year rise of 7.7 per cent in December's retail sales to pounds 20bn. A fifth of shoppers interviewed in the survey said they felt able to spend more this Christmas than they did last year. However, Verdict said a number of consumers were leaving their gift-buying to the last minute.

A third said that by 10 December they had not bought a single present. Verdict also cautioned that, in spite of its upbeat forecast, not all retailers would share in the upturn.