Retailers confident of festive trading boom

Despite a chill in the air and a gloomy economic outlook, the tills at Bluewater shopping centre were ringing up huge sales yesterday. On one of the busiest weekends of the year, 250,000 visitors poured through the doors to look for bargains in the run-up to the festive season.

Festive trading is expected to be "at least as good as last year". Almost two-thirds of retailers expect sales this Christmas to be the same as or better than in 2009, though 36 per cent fear their figures will be down, according to the British Retail Consortium (BRC).

Stephen Robertson, the director-general of the BRC, said: "It's reassuring to see a majority of retailers believe Christmas sales will be at least as good as last year, even if a third say they will be worse. But considering inflation is now at 3.2 per cent, growth of anything less than that would be a real-terms fall."

The forecast reinforces the view that retailers – most of whom have enjoyed better-than-expected trading this year – are confident that consumers will eventually splash their Yuletide cash, though the recent wintry conditions and the fact that Christmas Day falls on a Saturday means that last-minute shopping will be left later than ever this year.

But while next Saturday is expected to generate huge profits, an estimated £2.5bn was spent nationwide this weekend. The department store John Lewis, seen as a barometer of the high street's financial health, took £121m in sales in the week to last Saturday.

Furthermore, the rise in VAT to 20 per cent on 4 January is expected to bring forward some spending, particularly on big-ticket items, such as furniture and kitchens. The downside is that 80 per cent of the retailers surveyed expect VAT to have a "negative impact" on sales in January.

Mr Robertson said: "Promotions have hit a new level of intensity, retailers believe the next VAT rise is bringing sales forward and Christmas is usually a time when people spend despite their economic worries."

IHS Global Insight economist Howard Archer said this could help to ease retailers' fears over festive trading and that they "may still have a decent Christmas after all".