Strong Christmas for retail just a temporary blip

The relatively strong retail performance over Christmas might not be a sign of better things to come.

With a slew of “better than expected” trading updates flowing in, it would be easy to assume it was light at the end of the tunnel.

Tesco celebrated its best Christmas in three years, Next, John Lewis, Marks and Spencer and Poundland were all cheered by positive results over Christmas.

However, every positive result was accompanied by a word of warning from that the outlook for 2010 remains tough and challenging.

Retail businesses recognise that comparisons are against weak sales this time last year and so favourable results are to be expected.

DSGi the owner of the Currys and PC World chains today reported an 8% rise in the past 10 weeks enjoying record sales of TV’s and computers but warned that it expected 2010 to be tough across Europe, and particularly in the UK.

In a follow up study to its 2009 shopper behaviour report, Shoppercentric has found that consumers are still making significant changes to their weekly shopping habits.

Danielle Pinnington, managing director of the shopper behaviour research agency, says: “The key message here is that whilst economic data shows the recession is coming to an end, the impact will continue to be felt by the public for some time to come.

She adds that it’s important for retailers and manufacturers to bear this in mind when considering promotions and pricing strategy.

Stephen Robertson, director general of the British Retail Consortium says that while results have tended to be better than hoped there is “a risk that a healthy December may be only a temporary respite on the painful road to recovery.”

Helen Dickinson, head of retail ad advisory firm KPMG adds that given the economic outlook Christmas trading figures are “unlikely to be indicative of the trend for the rest of the year”.

Whether it is temporary or the trend of things to come, it can’t hurt for retailers to report some positive results for a change. If figures do revert back to less promising numbers during the next quarter at least we’ve had some respite and there is proof that things can improve.