With U.S. retailers due to report December same-store sales on Thursday (January 3), analysts believe the figures will be disappointing due to a fall in consumer confidence resulting from the uncertainty of fiscal cliff negotiations up to the December 31 deadline.
Consensus estimates for December, according to Retail Metrics data, fell another 0.2 of a percentage point for both same-store sales and same-store sales excluding drug stores to increases of 1.9 percent and 3.7 percent, respectively. Retail Metrics noted that the average analyst estimate has declined by 0.6 of a percentage point from the start of the month.
"This is significant downward move to sales estimates for the most important month of the year," says Retail Metrics President Ken Perkins, noting that December alone represents about 20 percent of annual sales. The gain would mark retailers' worst December performance since 2008, Retail Metrics said.
Meanwhile, a report in The Guardian says Britain's dire economic conditions were evidenced by the number of people who left Christmas shopping later than ever in the hope of securing bargains, while the subsequent post-Christmas sales rush was short-lived.
In addition, the number of U.K. retailers filing for bankruptcy has continued to rise, and was up 6 percent last year compared with 2011, and 18 percent higher on the 2010 figure, according to a report from accountants Deloitte. Thousands of shop workers lost their jobs last year as a series of leading retailers collapsed into administration, hit by soft demand and rising costs.
And more retailers are expected to declare bankruptcy in the coming months as it becomes clear that the level of Christmas shopping failed to make up for a poor 2012. 50,000 shop job losses as a predicted 4,000 to 5,000 stores close as a result of competition from online retailing.
Lee Manning, restructuring services partner at Deloitte, says: "Christmas trading appears to have been reasonable, though not spectacular and not enough to prevent insolvencies in the first quarter of 2013.
"Consumer confidence remains fragile, and where we have seen some respite through lower inflation, this has not translated into increased spending with many consumers preferring to reduce debt or save," he adds.
While seeing declining sales, retailers have seen costs rise, as rent and utility bills have soared.
The problem is compounded by the fact that the retail trade is among Britain's largest employers outside the public sector. The Centre for Retail Research estimates that more than 48,000 employees were affected by the 52 medium or large retail businesses that went bust last year.
Manning says retailers must adapt to changing market conditions, particularly the demand for online and mobile shopping, and slash their shop numbers. "There will always be a need for physical retail space, but at present too many retailers have too many stores and 2013 is likely to be marked by further closure programmes, both within and outside of formal insolvency processes.
"As an increasing proportion of retail sales move to online and mobile, retailers need to consider how their stores support sales across all channels by offering flexible delivery or collection options, becoming a product showroom and developing brand engagement and loyalty," he adds.
The increasing popularity of online sales was seen when a new British record for online shopping was set on Boxing Day (December 26), when there were 113 million visits to online retailers, about 30 percent more than last year, on a day when consumers typically leave home to visit stores for the start of New Year sales.