Christmas sales 'will be worst for shops since 1980s'

By James Thompson

Tuesday, 17 November 2009

Shoppers will spend less this Christmas for the first time since the late 1980s, as sales of non-food items fall by a massive £1.3bn, retail experts predicted yesterday.

Total sales over the festive season will decline because of low levels of housing transactions that will affect home-related sales, deflation in categories such as electricals, and the capacity that has come out of the market from retail failures over the past year, the consultancy Verdict said.

Maureen Hinton, Verdict's lead analyst, also said the reduction in VAT last November was a "significant factor" in this year's expected decline in fourth-quarter trading. "In order to maintain sales at last year's level, retailers would have to increase volume or prices, but overall both have declined as competition has intensified," she said.

Verdict forecast that, for the first time since it kept records in 1989, spending in stores would fall by 0.7 per cent, or £535m, in the fourth quarter. The main reason is expected to be a 2.5 per cent fall in non-food sales in the fourth quarter to £1.3bn.

Ms Hinton said: "The housing market is [affecting] home-related categories, such as furniture, flooring and DIY, but the decline also reflects deflation in electricals." While non-food retailers will grab excess sales from the collapse of rivals such as Woolworths and MFI, Ms Hinton said this would not make up for those who have left the market. But few expect a repeat of last year's deluge of administrations, and despite slowing food inflation, grocery sales are set to rise by 2.3 per cent, or £723m.

Ms Hinton said: "The cut in VAT is a significant factor, and many retailers will do better this Christmas because they will pick up share from casualties, as well as being up against weak comparatives." The worst hit will be electrical stores, with sales down 5.9 per cent, or £461m, and furniture chains, down by 9.3 per cent, or £343m.

British shops plead for end to EU trade war on shoes

Retailers fear timing of 15-month extension from January could not be worse

By James Thompson

Tuesday, 17 November 2009

Britain's shopkeepers have joined forces with the Government to urge European Union countries to vote against extending punitive tariffs on leather shoes from Asia at a crucial meeting on Thursday.

They have warned that extending the tariffs would "deal a hammer blow" to hard-pressed retailers and damage Europe's trade interests with Asia.

The EU's 27 member states will vote on whether to keep the 16.5 per cent and 10 per cent tariffs on imported shoes from China and Vietnam respectively for a further 15 months from January at an anti-dumping committee meeting in Brussels.

The tariffs came into force when Lord Mandelson was EU trade commissioner in 2006. They were intended to safeguard manufacturers, mainly in Italy, Poland, Spain and Portugal, who typically make more upmarket or designer shoes. But Lord Mandelson's Department of Business Innovation & Skills now opposes it. Yesterday, a spokesman said: "These measures are no longer justified and could damage our long-term trade interests with both China and Vietnam. They impose additional costs on consumers and in general don't benefit EU producers, whose products do not compete directly against shoes from China and Vietnam."

The original tariff was set for two years, but following a request in 2008 from members in favour the EU carried out a 15-month review, during which time the tariff remained.

European retailers, such as Clarks International, which have both stores and manufacturing operations, have paid about €800m (£710m) in import charges for leather shoes from the two Asian countries since the charges were introduced in 2006.

Alisdair Gray, the British Retail Consortium's director in Brussels, said: "As the UK shoe sector shows tentative signs of a recovery, the timing [of a tariff extension] could not be worse, and it would be another hammer blow for struggling shoe retailers as the UK limps out of recession. It is just protectionism."

Martin Salisbury, the finance manager at Clarks, said: "A number of footwear retailers have found life difficult, and that has been a consequence of increasing costs and a limited ability to pass them on to consumers. In a recessionary time, it is difficult to raise prices."

Over the past two years, Stead & Simpson, Dolcis and the company behind the Barratts and Priceless shoe chains have fallen into administration, although some have since emerged from the process.

New Look, the UK's third-biggest shoe retailer by sales value, said: "In our view, it is an unnecessary tariff that has not achieved its objective of protecting European footwear manufacturers."

A spokesman for the European Commission's trade department said: "The anti-dumping measures are about fighting unfair trade." Retailers fear that if a new 15-month extension from January 2010 is agreed, then a pro-tariff member could potentially ask for another review after this period, further extending the tariff. Thursday's vote will be critical to the EU's formal recommendation next month.