Traders to face tough Christmas

Retailers will find enticing customers difficult during the run-up to Christmas

UK retailers will face tough trading in the run-up to Christmas after sales volumes fell for the seventh month in a row in October, figures suggest.

Some 27% of retailers reported lower sales volumes than in October 2007, said a distributive trades survey by the Confederation of British Industry.

Additionally, some 25% of retailers expect sales to drop in November.

But the ratio of retailers reporting an increase to those seeing a decrease was unchanged from September.

'Challenge'

Though the numbers are better than many analysts had forecast, and despite a half-point cut in interest rates earlier this month, many retailers still believe they are in for a difficult few months.

Customers are no longer splashing out on non-essential spending and are finding their finances increasingly squeezed by difficult credit conditions, the prospect of unemployment and soaring bills. The downturn in the housing market has also knocked their confidence.

"We expect consumers to tighten their belts considerably further in the coming months," said Capital Economics economist, Vicky Redwood.

In August, the balance fell to its lowest point since readings began in 1983.

"Retailers have had another tough month and while there are some winners, the majority are suffering," said CBI survey panel chairman Andy Clarke.

"The sector looks set to endure a very challenging run-up to Christmas," he added.

The downbeat mood was echoed by Royal Bank of Scotland economist Ross Walker.

"Survey levels remain close to historic lows and deteriorating fundamentals, notably employment trends, indicate clear downside risks," said Mr Walker.

Furthermore, the Office for National Statistics last week said UK retail sales shed 0.4% in September, with customers showing concern about the problems in the financial markets.

But not all sectors reported poor figures. DIY retailers were helped by good weather earlier this month and the big-name supermarkets saw some growth.