Blog: A Happy Christmas for retailers?

Leonie Barrie | 5 December 2003

UK consumers are expected to part with an impressive £72.6 billion during the festive season - but if the sales promotions in London at the moment are anything to go by it would seem that clothing and footwear firms are turning to special offers and discounts to secure their slice of this £2,900 per household spend.

Just back from a couple of days in the capital, I was surprised at how lacklustre and uninspiring many of the shops were, considering we’re just three weeks away from Christmas. Eveningwear promotions were everywhere, suggesting that retailers are getting nervous about their festive performance and realise there’s little to motivate customers into parting with their cash.

This evidence seems to fly in the face of forecasts which point to overall strong demand for clothing, stable consumer confidence and a general feel-good factor. In fact, if you listen to the pundits no one seems to be talking Christmas down.

But with so much of today’s spending financed by credit and an interest rate rise increasing the cost of borrowing, maybe both retailers and consumers are steeling themselves for a fall in the New Year. In a press release today Verdict Research says it believes the outlook for January will be much tougher. "Ironically the more people spend on Christmas, the more likely it becomes that the Monetary Policy Committee will raise interest rates in the New Year to curb borrowing and make it a tough start to 2004 for retailers.” If that's the case, it's a no-win situation.