High Street fearing Christmas wipeout as shoppers go online and eye Black Friday deals

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Threat: A report published today reveals sales of clothing and homeware in high street shops slumped over the past three months ahead of the crucial festive period


High Streets are facing a make-or-break Christmas as shoppers desert stores and flock online.

A report published today reveals sales of clothing and homeware in shops slumped over the past three months ahead of the crucial festive period.

By contrast, online sales soared, underlining the dramatic shift in shopping habits in the UK.

With seven weeks to go until Christmas, experts are warning that the High Street faces another battle.

Threat: A report published today reveals sales of clothing and homeware in high street shops slumped over the past three months ahead of the crucial festive period

Threat: A report published today reveals sales of clothing and homeware in high street shops slumped over the past three months ahead of the crucial festive period

Not only are stores struggling to tempt shoppers through their doors, they also face the prospect of millions of consumers waiting for prices to be slashed, including on Black Friday later this month.

The British Retail Consortium said the ‘all-important golden quarter’ – the last three months of the year – had got off to a disappointing start on the High Street as shoppers stayed away.

Latest data published by the BRC and accountants KPMG shows in-store purchases of non-food items such as clothing and homeware fell 2 per cent in the three months to October 31. At the same time, sales of non-food items online jumped 6.7 per cent.

Nick Bubb, an independent retail expert, said: ‘Christmas is going to be subdued, it is going to be tough.

‘Black Friday is going to drive more spending, but it will come at a discount.’

The dismal figures come in a crucial week for the industry.

Marks & Spencer is about to reveal another slump in sales and profits in its half-year results tomorrow, with luxury handbag maker Mulberry set to take a £3million hit from the fallout at House of Fraser.

Fashion chain New Look will reveal today whether an overhaul of its stores has helped lift sales.

Christmas is a critical period for the High Street and last year sales growth in stores was the weakest for five years.

Tough trading in the festive period led to the collapse of Toys R Us and prompted a string of profit warnings from Debenhams, Carpetright, Mothercare and Moss Bros.

Latest data from Barclaycard also reveals a slump in retail spending last month, with department stores suffering from a 5.9 per cent drop in sales.

Barclaycard’s findings show that clothing spending also suffered, dropping 2.4 per cent in the biggest dip since October 2017.

The figures underline the crisis facing department stores, just days after Debenhams revealed it was closing 50 shops, putting 4,000 jobs at risk.

Meanwhile, House of Fraser’s new owner Sports Direct is battling with landlords to keep most of its 59 shops open.

Despite sliding non-food sales, the BRC’s data shows food sales in-store climbed 2.3 per cent over the past three months.

Bubb said: ‘It’s symptomatic of tough times on the High Street, with non-food bearing the brunt of it because that’s where consumers seem inclined to cut back.

‘There’s no reason why that’s going to change, with Brexit coming up and a subdued housing market.’

The Chancellor is under pressure to provide the High Street with more help after being criticised for not going far enough in his Budget. 

Philip Hammond pledged to help smaller retailers last month by offering £900million in business rates relief.

Paul Martin, UK head of retail at KPMG, said: ‘The Budget highlighted efforts to relieve some of the pressures on the High Street, but didn’t go far enough to address the concerns of many retailers.

‘With the potential implications of a hard Brexit added to the mix, retailers now need to juggle contingency planning alongside the busiest time of year.’

Will M&S face takeover bid? 

M&S recently unveiled TV presenter Holly Willoughby as a brand ambassador

M&S recently unveiled TV presenter Holly Willoughby as a brand ambassador

M&S recently unveiled TV presenter Holly Willoughby as a brand ambassador

Marks & Spencer could fall victim to a cut-price takeover bid if it does not speed up its transformation plan, one of the City’s leading investors warned. 

David Cumming, chief investment officer of equities at insurer Aviva, said the High Street stalwart also needed to consider slashing its dividend payments and use the money to boost investment to win back customers.

Paying a high dividend is ‘like fighting with one hand tied behind your back because that constrains your options’, he said. 

In a warning to M&S chairman Archie Norman and chief executive Steve Rowe, Cumming added: ‘Some shareholders might decide if they don’t defend themselves by investing, they aren’t worth defending. That would leave M&S vulnerable to a low-value bid.’

M&S, which recently unveiled TV presenter Holly Willoughby as a brand ambassador, is expected to post a 1.2 per cent slump in clothing and home sales in its half-year results tomorrow, while food purchases are predicted to fall 2 per cent.

Profits are forecast to drop by 7 per cent to £203million.

 



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