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Warm December gives nervous UK retailers the Christmas shivers

Retailers are hoping to see a last-minute dash to the high street this week afterChristmas shoppers appear to have left gift buying later than ever.

Unseasonably warm weather, security fears in the wake of the Paris terrorist attacks and a shift to online shopping have combined with hopes of catching a late bargain to make this year a nail-biter for many retailers.

Marks & Spencer, Debenhams and BHS are among those already running extensive promotions, particularly on knitwear and coats, which have been left on the rails as temperatures have topped 15C in one of the mildest Decembers in more than 50 years.

The average level of discounts across the high street is expected to hit 45% this weekend, according to analysts at consultancy Deloitte – the deepest level since 2008 when the British banking system nearly collapsed.

The warm weather has already pushed one retailer, Bonmarché, into a pre-Christmas profit warning, and analysts believe others could follow.

Retail analysts at HSBC cut their expectations for clothing sales over Christmas by 2% last week. “The net result will be a transfer into post-Christmas sales at a loss of revenue and or [profit] margin,” Paul Rossington said. He cut annual profit forecasts for Debenhams, Next, M&S and N Brown.

Food shopping has also been delayed as many people will take time off after this weekend. “Shoppers will leave it late this year – 60% are planning to do their main grocery shop in the week before Christmas,” said Mike Watkins, UK head of retailer and business insight at market research firm Nielsen.

An estimated £5.9bn is expected to be spent over the four days from Saturday to Tuesday, according to card provider MasterCard, more than half of it on groceries.

Retailers are also unsure of the impact of the Black Friday discount day in late November, which is likely to have encouraged shoppers to buy early to bag a bargain.

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“The end of 2015 sees the sector in a state of flux as retailers wait to see whether Christmas peak sales are impacted significantly by Black Friday. A number of retailers’ strategies for the coming year depend on how this ‘double humped camel’ scenario plays out,” said Julie Carlyle, head of retail at business advisory firm EY.

The wider availability of “click and collect” services, and public confidence in the idea of buying goods online and picking them up when convenient, has also encouraged shoppers to delay their gift purchases.

But with just days to go before Christmas, concerns about deliveries mean more people will now hit the high street, where the majority of sales are still made.

An estimated 2.5% more shoppers are expected to visit their local high street on Monday compared to last year, according to analysts at FootFall, as the belated shopping spree gets under way.

Steve Richardson, UK regional director at FootFall, said: “We expect the Panic Monday shift – when consumers abandon online shopping and take to the streets, in a bid to ensure they tick off all the final gifts on their Christmas lists – to be even more pronounced this year.”

He said Tuesday 22 December was likely to be the busiest day of the week, based on evidence from 2009, the last time that Christmas Day fell on a Friday.

Visa, however, is predicting that Wednesday 23rd will be the biggest shopping day, when its cardholders will spend nearly £2m a minute during the lunchtime rush as Brits spend 3% more overall than on the same day last year.


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