High Streets braced for a challenging Christmas
Sales in London in September were at their lowest since May according to the London Retail Consortium. Year-on-year sales growth fell to 6.8% in September compared with nearly 10% in August.
It is thought that the weakness of the US dollar resulted in fewer Americans visiting the capital and tube strikes deterred shoppers.
Consequently, Britain’s High Streets are discounting goods in an attempt to persuade shoppers to splash out as they prepare for a challenging Christmas.
However, slashing prices in the build-up to the festive period will have an impact on profits and many retailers are nervous that shoppers will wait until later than usual to do their Christmas shopping in the hope of further price reductions.
After 5 interest rate hikes since August 2006, increasing mortgage repayments and tighter lending conditions have prompted a slowdown in spending across the UK.
However, London stores have performed a little better than the rest of the UK according to the British Retail Consortium. It is anticipated that official retail sales figures will show growth of just 5.6% around the country.
LRC director Kevin Hawkins, who is also head of the BRC, said that overall London continues to outperform the UK, sales growth was the weakest since May and is being driven by promotional activity. Spending confidence seems to be weakening so price is likely to continue to be the main stimulant of demand in the next few months as consumers’ willingness to spend deteriorates.
Helen Dickinson, head of retail at KPMG said London may have already started to feel the impact of the credit crunch. The London economy is heavily dependent on financial services and the City.
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