Christmas gloom for retailers, says CBI; winter fuel bill woes for pensioners

29 November 2008

The Confederation of British Industry's (CBI) well monitored distributive trades survey dropped sharply in November, with 62 per cent retailers reporting lower sales as compared to a year ago.

Since only 16 per cent reported a rise in sales, the survey's balance of negative 46 per cent is a substantial drop from the negative 27 per cent in October 2008. What's worse is that the Christmas shopping season is unlikely to buoy the sentiment, a balance of negative 40 per cent anticipating a strong fall in year-on-year sales.

the survey predicts that a balance of 37 per cent foresee the retail sector deteriorating over the next three months, prompting around 57 per cent of companies to cut expenditure, the largest chunk to do so since the survey started in 1983.

Though retailers selling to the housing market were among the worst hit, sharp declines were visible in sales in groceries as well. Footwear and leather were the only sectors to report sales growth.

Andy Clarke, chairman of the CBI distributive trades panel, and retail director at online retailer Asda said that Christmas would be ''extremely tough'', and retailers would have to work harder to ''keep the tills ringing''. Moreover, he added that another stress point for retailers would be to change millions of prices to take into account the cut in VAT, which will be both tedious and costly.

Reports suggested that economists were still not convinced that the VAT cut announced by the Chancellor as part of the pre-Budget report would be adequate to get consumers spending again. They said that though the VAT cut and the widespread price discounting would be incentives for people to start spending, it was doubtful that they would part with cash given that unemployment is rising, and credit is also hard to come by.