Snow sends a shiver through shops

By Andrea Felsted and Andrew Bolger

Published: December 10 2010 19:27 | Last updated: December 10 2010 19:27

Retailers face a nail-biting fortnight in the run-up to Christmas, amid continuing bad weather and impending austerity measures.

“The next two weeks are make or break,” said one senior executive.

Scotland has been in the grip of severe weather conditions, and some store groups fear that a return of snow and ice in other parts of the country could blight the crucial festive trading period.

“Where there has been snow it has affected footfall – there is no question about it,” said the executive.

Another said: “If it drags on . . . a lot of retailers will be seriously nervous.”

Richard Hyman, strategic retail adviser at Deloitte, the professional services group, added: “It’s a bit of a lottery. It all depends on the weather. If this weather carries on, more or less, I think it’s going to be really serious.”

John Lewis, the department store group, said sales rose 1.3 per cent compared with the year before in the week to December 4. In the preceding week, sales were up almost 9 per cent, and some retailers suggested this impact could be reflected elsewhere in the sector.

Waitrose’s sales rose 5 per cent in the week to December 4. They were up 10.6 per cent in the preceding week.

“There is nervousness around the economy and if you are a non-food retailer I think the snow is a real challenge because people have not come out,” said a third executive. “It’s a question of how much of [those sales] will come back.”

The Federation of Small Businesses in Scotland said retailers that relied on passing trade had been particularly badly hit, as had those in outlying areas that struggled to receive deliveries.

Andy Willox, the FSB’s Scottish policy convener, said: “Scotland’s business community, especially in the central belt, has taken a real hit over the past two weeks, and there’s the possibility of more trouble to come.”

Some high street spending has moved online during the bad weather. John Lewis said online sales rose almost 50 per cent year-on-year in the week to December 4.

But Neil Saunders, consulting director of Verdict, estimated that, for every £1 spent on the high street, only about 70p was spent on the internet. “It is a lot of impulse spending that is lost out on. It definitely depletes retail sales,” Mr Saunders said.

Tesco, Britain’s biggest supermarket group by market share, was upbeat on Christmas sales in spite of the weather and uncertainty about the economy. It predicted that lost sales would come back, and that consumer confidence was returning.

John Lewis said it had seen a surge in demand for heaters, wellington boots, children’s coats, gloves and scarves as well as duvets, mattress toppers, hot water bottle covers and electric blankets.

Jason Gordon, of the consultancy Booz & Co, believes the immediate period is crucial. “Retailers have been biting their nails for some time. I think the next seven days will be absolutely pivotal. Once somebody loses their nerve and goes [for significant discounting], there will be a whole stream of people who will have to follow in immediate succession,” he said.

However, PwC, the professional services group, found that retailers appeared to be holding their nerve on discounting.

Some 55 per cent of the 100 high street retailers it surveyed were holding sales or advertising promotions, compared with 60 per cent last year – in spite of an average discount of 39 per cent compared with 37 per cent last year.

Supermarkets are seeking to kick-start spending by stepping up promotions on groceries, according to PwC, with an average of nine of the 20 typical Christmas-related products it tracked appearing on promotion last weekend, compared with eight the weekend before.