Numis expects specialists to do well, while electricals and furniture markets look grim
The retail winners in 2005 are likely to be Carphone Warehouse, Halfords, Findel and Mothercare, according to Numis analyst Iain McDonald.

In his annual prediction for the coming year, entitled Murder on the Shopfloor?, he also tipped Burberry and Ted Baker to perform, as well as Topps Tiles and Floors 2 Go. However there may be trouble ahead for Marks & Spencer, House of Fraser, WHSmith and Dixons.

McDonald said economic factors could still have a strong impact on retailing next year, because consumer confidence is likely to be fragile as the result of a cooling housing market and rising utilities costs. On the retail side, price inflation is likely to be low, while costs, particularly in wages and property, will remain high.

He said competition from non-specialists, such as Tesco, Asda and Argos, means that the best bets are retailers that manage to insulate themselves through exclusive product ranges, or offer a better level of service or broader range than the jack-of-all-trade retailers. He said not all areas of retail will be affected in the same way, believing that big-ticket retailers, such as electricals and furniture, will be hit hardest, as will clothing.

McDonald said: 'Soft demand, rising capacity and a wounded M&S make for a dangerous combination. In addition, the likes of Debenhams, Arcadia, Bhs and New Look are no longer Plcs and can therefore concentrate in driving cash profits, rather than worrying about negative City reaction to launching promotions before Christmas. Plcs such as Next, M&S and HoF are not competing on a level playing field.'