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| Retailers fearing grim Christmas | Retailers fearing grim Christmas |
| (about 9 hours later) | |
| By Russell Hotten Business reporter, BBC News | By Russell Hotten Business reporter, BBC News |
| The pain being felt by UK retailers is on display in their shop windows: "mid-season sale", "two-for-one", "40% off". | The pain being felt by UK retailers is on display in their shop windows: "mid-season sale", "two-for-one", "40% off". |
| Traditional end-of-year discounting has started early and is likely to set the tone for trading at Christmas and New Year. | Traditional end-of-year discounting has started early and is likely to set the tone for trading at Christmas and New Year. |
| The closure this week of Carphone Warehouse's 11 Best Buy electricals outlets and the sale of larger rival Comet for £2 underline that things have been tough for months, years even. | The closure this week of Carphone Warehouse's 11 Best Buy electricals outlets and the sale of larger rival Comet for £2 underline that things have been tough for months, years even. |
| From Debenhams to Topshop to River Island, retailers are discounting by up to 40% in a bid to kick-start spending. | From Debenhams to Topshop to River Island, retailers are discounting by up to 40% in a bid to kick-start spending. |
| The prospect of retailers having a positive Christmas "hangs in the balance", says Helen Dickinson, head of retail at the consultancy group KPMG. | The prospect of retailers having a positive Christmas "hangs in the balance", says Helen Dickinson, head of retail at the consultancy group KPMG. |
| Even those companies that are maintaining sales are doing so at the expense of margins. | Even those companies that are maintaining sales are doing so at the expense of margins. |
| Marks and Spencer this week reported weak sales, but even weaker earnings as it absorbed increased costs rather than pass them on to customers. | Marks and Spencer this week reported weak sales, but even weaker earnings as it absorbed increased costs rather than pass them on to customers. |
| M&S is "in an increasingly promotional environment", was how chief executive Marc Bolland summed up market conditions. | M&S is "in an increasingly promotional environment", was how chief executive Marc Bolland summed up market conditions. |
| Price war | Price war |
| Latest figures from the British Retail Consortium (BRC) indicate that the UK saw almost no growth in non-food sales over the past year. | Latest figures from the British Retail Consortium (BRC) indicate that the UK saw almost no growth in non-food sales over the past year. |
| Food sales are only slightly higher on the year, and that is despite a supermarket price war and easing of food-price inflation. | Food sales are only slightly higher on the year, and that is despite a supermarket price war and easing of food-price inflation. |
| "It's clear customers are cutting back whatever they're buying," says BRC director general Stephen Robertson. | "It's clear customers are cutting back whatever they're buying," says BRC director general Stephen Robertson. |
| "This is evidence of the basic weakness of consumer confidence and demand, and is worrying this close to Christmas," he said. | "This is evidence of the basic weakness of consumer confidence and demand, and is worrying this close to Christmas," he said. |
| Trading at this time of year can make or break a company; the difference between survival and bankruptcy. | Trading at this time of year can make or break a company; the difference between survival and bankruptcy. |
| "There are clearly a number of large retailers who are in jeopardy," said John Stevenson, analyst at Peel Hunt. "It's the time when banks are watching closely. | "There are clearly a number of large retailers who are in jeopardy," said John Stevenson, analyst at Peel Hunt. "It's the time when banks are watching closely. |
| "As for smaller retailers, I'm sure some will just chuck in the keys and say 'I've had enough'." | "As for smaller retailers, I'm sure some will just chuck in the keys and say 'I've had enough'." |
| Can anything be done? | Can anything be done? |
| There is a common view that retailers are passive victims of an wider economic storm, unable to respond. | There is a common view that retailers are passive victims of an wider economic storm, unable to respond. |
| Buzz phrase | Buzz phrase |
| And yet, the sector is developing new strategies for a new era. Whether they can be introduced fast enough to stop another wave of retailers going to the wall is, however, doubtful, Stevenson says. | And yet, the sector is developing new strategies for a new era. Whether they can be introduced fast enough to stop another wave of retailers going to the wall is, however, doubtful, Stevenson says. |
| The new buzz phrase in retailing is "multi-channel", loosely defined as a strategy that involves selling through stores, websites, mobile phones, catalogues, social networking sites, et cetera. | The new buzz phrase in retailing is "multi-channel", loosely defined as a strategy that involves selling through stores, websites, mobile phones, catalogues, social networking sites, et cetera. |
| Though multi-channel strategies are still in their infancy, the Christmas sales period could provide a strong indication of whether it offers a way forward for long-suffering retailers. | Though multi-channel strategies are still in their infancy, the Christmas sales period could provide a strong indication of whether it offers a way forward for long-suffering retailers. |
| Multi-channel means offering shoppers the chance to buy goods when, how, and where they want. | Multi-channel means offering shoppers the chance to buy goods when, how, and where they want. |
| Examples are: | Examples are: |
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| House of Fraser executive director Robin Terrell, former managing director at Amazon.co.uk, hails the Aberdeen venture as "an entirely new concept" and "pivotal" in the company's development. | House of Fraser executive director Robin Terrell, former managing director at Amazon.co.uk, hails the Aberdeen venture as "an entirely new concept" and "pivotal" in the company's development. |
| "Almost every element of traditional retail thinking has changed," he said. "Linking the multi-channel offering with the physical space makes every store a flagship. | "Almost every element of traditional retail thinking has changed," he said. "Linking the multi-channel offering with the physical space makes every store a flagship. |
| Early days | Early days |
| "Even a 25,000 sq ft store can offer the full range. Technology can enable us to do everything on a smaller scale. It changes how you sell and the space needed to sell," he said. | "Even a 25,000 sq ft store can offer the full range. Technology can enable us to do everything on a smaller scale. It changes how you sell and the space needed to sell," he said. |
| Though these are early days for such strategies, research firm IDC Retail estimated that multi-channel shoppers spend between 15% and 30% more than single-channel users. | Though these are early days for such strategies, research firm IDC Retail estimated that multi-channel shoppers spend between 15% and 30% more than single-channel users. |
| And IMRG, the industry association for e-retailing, believes that one area of multi-channel - mobile phone use - is showing clear signs of growth. | And IMRG, the industry association for e-retailing, believes that one area of multi-channel - mobile phone use - is showing clear signs of growth. |
| Retail sales via smartphones rose from 0.4% at the start of 2010 to 3.3% in second quarter of this year, IMRG said. And the rate at which mobile users abandon purchases at the checkout has fallen sharply. | Retail sales via smartphones rose from 0.4% at the start of 2010 to 3.3% in second quarter of this year, IMRG said. And the rate at which mobile users abandon purchases at the checkout has fallen sharply. |
| Technology and data speeds have finally advanced enough to allow a mobile sales market to take off, says Derek Eccleston, research director at eDigitalResearch. | Technology and data speeds have finally advanced enough to allow a mobile sales market to take off, says Derek Eccleston, research director at eDigitalResearch. |
| "Mobile is increasing becoming the cement between stores and websites. If retailers want to drive their mobile strategies forward with mobile sites, shopping apps and localised deals, then it is important that they offer customers to ability to connect." | "Mobile is increasing becoming the cement between stores and websites. If retailers want to drive their mobile strategies forward with mobile sites, shopping apps and localised deals, then it is important that they offer customers to ability to connect." |
| And yet, the cash value of these transactions remains tiny in comparison to what shoppers are spending over-the-counter. | And yet, the cash value of these transactions remains tiny in comparison to what shoppers are spending over-the-counter. |
| Even internet retailing in the UK generally has taken a knock (though nothing compared to bricks and mortar outlets). | Even internet retailing in the UK generally has taken a knock (though nothing compared to bricks and mortar outlets). |
| 'Watershed Christmas' | 'Watershed Christmas' |
| IMRG has cut its e-sales growth forecast for this year to 16%, down from 19% at the start of 2011. The sector grew by 18% in 2010. | IMRG has cut its e-sales growth forecast for this year to 16%, down from 19% at the start of 2011. The sector grew by 18% in 2010. |
| Fast-growing online fashion retailer Asos has seen a sharp fall in UK growth, although the drop was more than made up by overseas sales. | Fast-growing online fashion retailer Asos has seen a sharp fall in UK growth, although the drop was more than made up by overseas sales. |
| Chief executive Nick Robertson told the Financial Times in October that the fall UK sales was worse than expected and "a bit of a wake-up call". | Chief executive Nick Robertson told the Financial Times in October that the fall UK sales was worse than expected and "a bit of a wake-up call". |
| No-one expects internet retailing in the UK to contract, however. And the fresh strategies being developed by retailers will help them align their offerings with the new demands of customers. | No-one expects internet retailing in the UK to contract, however. And the fresh strategies being developed by retailers will help them align their offerings with the new demands of customers. |
| But as Stevenson says: "The internet and multi-channel are the way forward. But they won't came fast enough for what could be a watershed Christmas for the balance sheets of several retailers." | But as Stevenson says: "The internet and multi-channel are the way forward. But they won't came fast enough for what could be a watershed Christmas for the balance sheets of several retailers." |
| Have you been affected by the issues covered in this story? Has the current economic climate affected your spending plans for Christmas? Do you work in the retail business? Send us your comments and experiences using he form below. |