ICM Poll: Shoppers reluctant to splash out at Christmas

Following last week’s anniversary of Lehman Brothers’ collapse, store groups expect to post better trading figures in the coming months because of soft comparatives.

However, exclusive research by ICM for Retail Week shows that consumers remain reluctant to splash out. Last December was the worst Christmas on record for the sector, when like-for-likes fell 3.3%.

The ICM study reveals that only 9% of consumers plan to increase their spending this year, but half plan to maintain it at last year’s level.

John Clare, senior independent director of JJB Sports and former DSGi chief executive, said that he was not surprised by the main findings of the survey.

He said: “The 33% who say they are going to spend less on Christmas is roughly the percentage of the population that have been directly affected by the recession, either by having lost their jobs or having their hours cut.”

Asda chief operating officer Andy Clarke said Asda’s income tracker has shown shoppers are better off this year, but noted: “Customers are still being cautious. That’s why it’s our job to lower prices aggressively.”

But Gary Grant, managing director of toy retailer The Entertainer, and Jessops executive chairman David Adams thought the findings might turn out to be unduly pessimistic.

Grant said: “It’s likely people will be cautious this Christmas. People will probably be spending less across the board, or impulse items might be cut. From a toy perspective, I think spending on children is fairly resilient.”

Adams said: “Christmas has always been quite resilient. Christmas always happens but tends to come later.”

ICM found that 18- to 24-year-olds are most likely to spend more. Peacocks chief executive Richard Kirk said: “I’m looking forward with some optimism to this Christmas. We bought for a positive like-for-like trend.”

ICM head of retail research Michelle Hesse observed: “The impact of recession is perhaps being felt more this Christmas than last.” She said last year’s spend was about 25% less than anticipated and the 33% finding may reflect greater realism on the part of shoppers.

Retailers’ December sales may benefit from the looming VAT rise in January. The study showed that 9% of shoppers are “very likely” to bring forward significant purchases to beat the rise and another 23% are “quite likely” to do so.

Clare said: “I think trading will be very much stronger between Boxing Day and New Year’s Day, assuming the VAT rate goes up.

Adams said: “The VAT rise won’t help. It will have a psychological effect and will create lots of buzz in the few days before the change. New year will be tough. I don’t see enormous green shoots.”