The first quarter is likely to be “very hard” for retailers according to the latest study from research house Verdict and technology firm SAS.

The report forecasted retail spending in 2012 to rise by just 1.2 per cent, the third lowest rate in almost four decades. However, after a tough first quarter retailers will be through the worst of it, with consumer confidence in the second and third quarters likely to experience a boost from the Queen’s Diamond Jubilee festivities and the Olympics.

Non-food retailers will suffer another year of sales decline, the fourth in five years, as revenues come back by about £740 million altogether.

Retailers of electrical goods, furniture, homewares and DIY are thought to be the hardest hit as sales could slice £900 million year-on-year. Clothing, health and beauty sales are expected to emerge the strongest with a rise in sales.

Although grocers are expected to benefit from the trend over the last few years to eat at home, leading supermarket groups will have to continue their battle for 5.5 per cent space growth in the coming year.

The report stated: “This will add around 6m sq ft of new space, but volume growth will be at a minimum as shoppers cut out waste and buy wisely.

“Market leader Tesco will be the most challenged as its competitors open stores in direct competition to it, offering consumers more choice, in more and more of its locations.”

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