Shops expect Christmas chill at tills

Retailers are bracing for a miserable Christmas, as new figures put last month's sales and holiday expectations at a 22-year low.

Sales are down heavily over a year ago, according to the latest distributive trades survey from the Confederation of British Industry (CBI).

Over half of retailers said their sales volumes in November were down over 2004 levels, while just 17% said they were up.

The resulting balance of minus 35% outpaces September's low of minus 24%, the year's worst to date and the lowest figure in the CBI's 22-year history of conducting the survey.

While they are hoping for a better December, particularly from late Christmas shoppers, most are keeping a level head. Some 38% of shop owners expect sales to fall over last December's volumes, while 15% think they will rise, leaving a balance of minus 23%, again a new low on the year.

"We've seen some pretty weak numbers on the CBI retail sales survey over the recent past, but nothing quite on this scale," said George Buckley, UK economist at Deutsche Bank.

However, Buckley said the figures must be "interpreted with care."

This survey was particularly weak, he said, because the data experienced a recovery in November 2004. Retailers continued their recovery in December of last year, so next month's report may show an equally poor result.

Nevertheless, Buckley said that "if what we have seen from this morning's data is a true reflection of the state of the consumer last month then the possibility of further rate cuts remains intact.

"In fact, we had argued that, with respect to further rate cuts early next year, that much will depend on how the consumer performs over the Christmas period. This is not a good start."

Online retailers, meanwhile, are selling goods at unprecedented rates, much to the chagrin of their high-street counterparts. The convenience of online shopping is driving many to banner years in terms of sales growth.

Internet clothing and electronics merchants have seen sales grow by over a quarter on the year, according to research from the Internet Media Retail Group (IMRG). It estimates that 24 million British shoppers will spend £5bn online this holiday season, an average of £208 each.