High street retailers predict carnage at Christmas
Thursday 02 December 1999
The Confederation of British Industry said yesterday that the number of retailers expecting prices to be lower this month than last Christmas outweighed those saying they would be higher - the first time this has happened in the 16 years the CBI has run the survey. It also found prices were flat last month for the first time.
The survey adds to growing evidence that retailers are struggling to cope with intense competition on the high street that is driving down prices. Separate figures showed house prices fell last month while manufacturing industry grew for the sixth month in a row, indicating that the imbalance in the economy is starting to correct.
The CBI said retailers expected sales to rise "significantly" this month following a strong recovery in volumes in November. Alastair Eperon, chairman of the distributive trades panel, said the pick-up in November reflected the impact of competitive pricing strategies. "Fierce competitive pressures are set to hold down prices," he said, adding that interest rates should stay on hold next week.
The main casualties were footwear and leather retailers, which suffered a second month of sharp decline in sales volumes and prices. Clothing shops and booksellers also reported falls.
Sectors associated with the housing market, such as furniture, carpets and household goods reported the strongest increases in sales volumes. However, more than two-thirds of retailers of household goods said prices fell last November and would fall again this month.
The survey supports anecdotal evidence that big name retailers such as Marks & Spencer, House of Fraser and C&A are cutting up to a third of prices over the festive period. "If there's one thing we've learnt in this retail recovery, it's that bargain hunting is in fashion," said Adam Law of Barclays Capital.
Barry Naisbitt of Abbey National added: "We are in a rather different world of consumer behaviour. They are rather reluctant to take higher prices and continue shopping around."
In sharp contrast, a shortage of raw materials and the surging oil price sent manufacturers' input prices soaring to their highest level for four years. The cost of raw materials rose for the fourth month in a row hitting 57.1 last month compared with 56.3 in October on an index where anything over 50 indicates a rise. The Chartered Institute of Purchasing and Supply, which compiled the data, said: "Widespread shortages, strong global demand and high oil prices ... have led to a further acceleration in the rate of input price inflation."
Its report also showed the sector expanded to its highest level for two years, but at a slower rate than forecast. Its index rose to 54.2 compared with 54.1 in October and forecasts of 55.0. "Strong domestic demand for UK manufactured goods, resulting in part from the run-up to the millennium, was supplemented by a modest increase in the demand for exports," it said.
Meanwhile Halifax, Britain's largest mortgage lender, said prices fell 0.5 per cent last month. But it said the housing market was still enjoying double-digit inflation - 10.7 per cent compared with 10.8 in October.
"The favourable affordability situation, together with a further improvement in economic conditions, should support a relatively strong housing market over the next 12 months," it said. "Higher interest rates, however, will constrain housing demand. Accordingly annual house price growth is forecast to slow to 8 per cent by the end of 2000."
- 1 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 2 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 4 Sir Winston Churchill’s family begged him not to convert to Islam, letter reveals
- 5 UK weather: 'Coldest night of the year' tonight as freezing temperatures plummet to -10C
President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations
Sir Winston Churchill’s family begged him not to convert to Islam, letter reveals
AirAsia flight QZ8501 missing: Search for plane carrying 162 passengers from Indonesia to Singapore suspended overnight
Millions of Britons struggling to feed themselves and facing malnourishment
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Nigel Farage: Ukip leader named 'Briton of the year' by The Times
Immigrants make UK racist, says Ukip councillor Trevor Shonk
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...