THE retail sector is bracing itself for one of the toughest years on record in 2012 – but there was little sign of the gloom yesterday as shoppers hit the high street in force to find the bargains.
Rising unemployment, frozen wage packets and worries about the future have hit consumer spending, and a number of retailers are expected to go bust next year with many more closing stores.
Electronics retailer Dixons, entertainment chain HMV and chocolate specialist Thorntons, based in Alfreton, Derbyshire, are all in the process of closing branches.
Despite the gloomy outlook for 2012, millions of shoppers hit the high street yesterday in search of Boxing Day bargains.
Early indications were that Meadowhall Shopping Centre in Sheffield had its busiest Boxing Day on record, with over 150,000 shoppers expected to visit.
Darren Pearce, Meadowhall centre director, said: “Over the years Boxing Day has become the most talked about shopping day of the year, with many shoppers seeking to get their hands on the best post-Christmas bargains.
“Last year we saw over 90,000 shoppers pass through our doors even with the shortened Sunday trading times. This year indications show the final figures will be closer to 150,000.”
Peter Cook, centre director at the White Rose Shopping Centre in Leeds, said shoppers started to arrive for the Next sale at 1.30am, with around 3,000 in the queue when the shop opened at 6am.
Mr Cook said around 68,000 people passed through the doors of the centre on Boxing Day last year and he was expecting to match or beat that figure this year.
But Dr Howard Archer, chief economist at IHS Global Insight, said many shoppers were using the sales to buy items they are struggling to afford.
“We suspect that more people will be reluctant to buy items that they don’t really want or need in the sales. This means that interest in the sales could fall away pretty quickly in sales once the best of the bargains have gone. This would put pressure on retailers to cut prices even more, thereby further hurting their margins,” he said.
Shopping search engine Shopow had predicted online sales of £368m on Boxing Day, but last night it revised that figure upwards as many people chose to shop from home. Shopow’s independent shopping expert Ellen Flood said: “Budgets have been tight for shoppers this year. Retailers have responded by rolling out rock bottom prices online and on the high street.”
Dr Archer said: “I think 2012 will be a very tough year for retailers and likely worse than 2011. We expect consumer spending to remain under pressure for much, if not all, of the year.”
A number of retailers are struggling to cope with the downturn. Lingerie specialist La Senza plans to enter administration, blaming the high street trading conditions.
HMV said sales of CDs and DVDs have been hit by supermarket competition and online sales and earlier this month Thorntons issued a profits warning. It is to close up to 180 shops over the next three years.
Outdoor goods company Blacks, which reported a £16m loss in October, is hoping to find buyers by the end of January.
Economists said there is some solace for retailers who manage to survive the first half of 2012 –the second half is expected to get easier. “Consumers’ purchasing power will be squeezed appreciably during the early months of 2012, but the squeeze should ease as 2012 progresses due to inflation falling back markedly,” said Dr Archer.
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