Retailers face nervous Christmas as shoppers dip and sales struggle

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The Independent Online

Shoppers deserted the high street last month while the volume of cash spent was virtually stagnant, according to two reports that will fuel fears among retailers of a feeble Christmas.

The number of visitors to the UK's main shopping zones fell by 7.3 per cent on November 2005's total, according to FootFall, the analyst that measures retail traffic. It said the number of shoppers rose just 4.7 per cent on the month into November, making this the worst build-up to the festive season since it started collecting data in 2002.

Meanwhile the closely watched survey by the British Retail Consortium (BRC) showed the value of retail sales was up just 0.5 per cent compared with last November. This was the weakest figure for like-for-like sales - measuring the same area of floor space - since March this year and a fraction of the 2.6 per cent growth seen in October.

FootFall said that it was a "real concern" that retailers had failed to ignite the usual seasonal interest from customers despite launching early price cuts.

Natasha Burton, a spokes-woman, said: "We are already hearing reports that this will be the worst Christmas for over 25 years and on the evidence of this index, it could be a bad end of year for retailers who have normally relied on buoyant trading in the festive period."

The BRC said that sales growth was driven by food rather the general goods, with clothing and big-ticket homewares particularly hard-hit. It said that the unseasonably mild weather - November was the warmest in 100 years - had had an impact although general consumer pessimism was affecting trade.

Speaking before the BRC figures were published overnight, Global Insight economist Howard Archer said: "Retailers will clearly be hoping fervently that consumers are not significantly deterred from splashing out for Christmas by November's interest rate hike."

Helen Dickinson, head of retail at accountants KPMG, said the figures reflected the "delicate state" of the retail sector. "High levels of promotional activity failed to drive the desired uplift and many retailers will be disappointed by November's results," she said. "The jury is out on whether the consumer will deliver."

However Kevin Hawkins, the director-general of the BRC, played down the increasing gloom among commentators, saying it would be "unwise" to jump to conclusions. He told The Independent: "For retailers it's going to be a white-knuckle ride and keeping your nerve is going to be important when it comes to making a decision about cutting prices. [Sales] will be very massive in the last two weeks, especially as we have a full trading day before Christmas on a Sunday."

A separate survey of shopper numbers, by analysts SPSL, contradicted FootFall, saying the Christmas rush had finally started. It said shopper numbers at the weekend were up 7.6 per cent on the weekend before and virtually matched figures on the same weekend of 2005.

Mr Hawkins added that people now used the internet for price-checking and as a tool to drive down prices in stores. "It is still only 4 per cent of sales [but] it has much more significance than its market share implies," he said.

The Interactive Media in Retail Group estimated consumers spent a record £180m online yesterday.

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