Retailers are gearing up for a nerve-wracking final week before Christmas as mounting uncertainty clouds the crucial festive trading period.
The disruption of Black Friday, mild weather and the Paris terrorist attacks have combined to create a “slower build” to spending as Christmas approaches, according to analysts and retailers.
The concern around trading in the golden quarter was laid bare this week when fashion retailer Bonmarché issued a shock profit warning.
The womenswear specialist, which also revealed the departure of its chief executive Beth Butterwick, blamed “very challenging” market conditions post-Black Friday that “have not normalised”. It cautioned the tough environment was “likely to continue for the remainder of the winter”.
Shore Capital analyst Clive Black warned: “We do not believe that Bonmarché’s warning and disappointment will be the last to be recorded by retailers.”
He said he awaited the January updates “with increasing nervousness surrounding the robustness of earnings forecasts for the non-food retailers”.
However, retailers hold out hopes of a last-minute spending dash with Christmas falling on a Friday this year.
Very late and large Christmas
Black agreed that it will be a “very late and very large” Christmas, with overall sales up on last year. He expects the pre-Christmas four-day trading week would be “massive” for both food and non-food retailers.
But he said the late peak was “not good for stores” because it forced them to pay extra staff to operate checkouts and manage queues.
Retailers are also expected to offer significant discounts to lure shoppers. Deloitte predicts discounts will soar to an average of 45% on high streets this weekend – the sharpest pre-Christmas price cuts since 2008.
Trading so far has been characterised by an online shift. Shopper traffic was down almost 2.7% in the week to December 13, footfall data showed.
But the Centre for Retail Research suggested Friday will mark the start of a six-day £6bn spending spree. It has branded the day after ‘Panic Saturday’ as 12.6 million shoppers are expected to hit the high street.
SuperGroup chief executive Euan Sutherland, who unveiled a 54.4% hike in interim pre-tax profits to £19.3m this week, observed: “Every Christmas it’s getting later and later and the competition is more and more difficult. There are still some very, very big days to go but we are well set.”
Grocery shoppers were expected to spend £6.4bn in supermarkets alone in the two weeks before Christmas, according to forecasts from Nielsen and Waitrose anticipates sales will peak between 11am and midday on Wednesday.
Toy retailers are also preparing for the usual spike in demand, but noted shoppers are leaving it later than ever. The Entertainer boss Gary Grant said like-for-likes had fallen in the past two months as shoppers “left things late” in the hope of securing cut-price deals.
Grant noted consumer confidence “drained” after the Paris terrorist attacks, but believes shoppers were ready to spend again in the final week of pre-Christmas trading and predicted a bumper final week.
He said: “Black Friday has become a distraction and it’s been a slower build this year, but I think we are going to finish really well.”