By Claire Reilly
In light of difficult trading conditions over the past year, many in the retail industry were expecting a tough Christmas trading period. However, while December sales were “soft”, they were “not…catastrophic,” according to new research released by RBS.
The economic analyst group released its Retailing report this week, collating survey data from 2,210 electronics, hardware and apparel stores across the country. In it, RBS noted that “retailers generally have been more responsible this Christmas, purchasing lower levels of stock and taking appropriate and timely action at clearance.
“As a result, reported earnings will likely be soft rather than catastrophic,” the report read.
While retail as a whole was generally steady, this was the result of positive growth in the apparel sector offsetting slightly negative results in the electronics sector.
“The electronics category traded poorly through Christmas with our respondents reporting a 6% decline in December like-for-like growth,” RBS reported. “We note, however, that their trading results varied greatly suggesting likely market share shifts in the quarter.”
The varied results were “largely dictated by the skew of categories…and exposure by state.” According to the report, “AV remains the poorest category by some margin,” while “the computer category was also challenging for retailers not ranging Apple.
“Price deflation in AV is expected to continue medium term, and risk exists that grey market imports could extend deflation throughout other categories.
“On the positive side, whitegoods appeared comparatively robust, with little price deflation seen.
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“Unlike last Christmas, retailers have generally been able to prepare for lower levels of demand and have taken a more diligent process to clear stock in season," said RBS.
“Consistent feedback has been that suppliers and retailers have been disciplined with inventory and collectively managed softer levels of demand well. Retailers commented that there have been very few ‘clearance deals’ from suppliers in early January suggesting industry inventory levels are reasonably placed.”
Just as the news from Christmas was not as grim as may have been expected, the outlook for the next two months is also reasonably positive. While 24 per cent of respondents to the RBS survey expected trading in January and February to be worse than December, 43 per cent had expectations in-line with December, while 34 per cent expected trading to be better than last month.