Festive season looks stronger for retail

The High Street expects growth to pick up further in the run-up to Christmas.
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In its latest Distributive Trades Survey, the CBI also showed that business sentiment about the retail sector over the coming three months is now positive for the first time since August 2007.

Responding to the survey, 40 per cent of retailers said their volume of sales in the year to November had risen, while 27 per cent said they fell.

19 per cent of retailers expect that, compared with last December, sales volumes will improve next month in the pre-Christmas period.

In light of the growth in sales, the High Street is feeling optimistic about the outlook. The balance of 13 per cent of firms expecting an improvement over the next three months is the first positive result since August 2007 and the strongest since May 2004.

The volume of orders placed on suppliers also rose for the first time since January 2008 and was at the strongest rate since November 2007.

Only two per cent of firms said sales were poor for the time of year, which was somewhat better than predicted, while three per cent expect sales to be above the seasonal norm in December.

Among the survey questions asked on a quarterly basis, a balance of 27 per cent of firms reported that they had reduced their headcount, and the same rate is forecast for December. While this shows that retail employment conditions remain tough, November's result is not as weak as in August (-41 per cent).

Retail prices continued to grow, but at a slightly slower rate than firms reported in the last quarterly survey. Prices are expected to rise at the same pace next month.

Andy Clarke, chairman of the CBI Distributive Trades Panel, and chief operating officer of Asda, said:

"It’s reassuring that the high street now has a second month of sales growth behind it, and it looks like December will be even better. A lot of retailers have suffered during 2009, and many are relieved that the year is ending on a more positive note.

"Despite the more upbeat mood and pre-Christmas sales growth, consumers are still worried about job losses and a weak economy. In 2010 the high street will find that recovery is fragile and slow.

"Christmas aside, this December will also be busy because shoppers are trying to beat the VAT rise in January, and many retailers are starting to target that behaviour."



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