The third quarter for the UK retail industry was not the disaster expected, according to the latest meeting of the KPMG / SPSL Retail Think Tank (RTT).
The group says it was healthier than predicted due to the easing of pressures on costs.
However, it expects pressure will be put on demand, margins and costs in Q4, having a negative impact on the overall state of health of UK retail.
A majority of members predict that growth in demand will slow as consumers begin to respond to debt levels. This will cause retailers to discount more heavily to stimulate sales and affect margins.
The RTT also think the Chinese Government’s withdrawal of some tax benefits from exporters will also affect margins while costs will be increased due to the development and servicing of internet sales channels.
Richard Hyman of Verdict Research said: "Retailers have been doing well to trim their stocks and costs in response to softening demand. However, for many it will be a difficult Christmas with consumers very demanding about what they expect and where their money is spent. Consumers will not be cancelling Christmas this year but retailers will be fighting harder than ever for a share of the action".
The RTT’s next meeting will be on January 15, 2008.