Tough year in store for retail after a festive 'false dawn'

RETAILERS face a tough 12 months ahead as consumer spending drops despite reporting robust Christmas sales figures, the head of the industry's trade body has warned.

Stephen Robertson, the director general of the British Retail Consortium (BRC), predicted no growth in consumer spending over 2010 and indicated the recent glut of positive updates from the festive season may represent a "false dawn".

Echoing warnings from the likes of Marks & Spencer chief executive Sir Stuart Rose, Robertson said consumers' concerns over higher taxes and the end of many fixed-rate mortgage deals would squeeze spending.

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"There will be increasing consumer uncertainty and we will see consumer confidence dropping," Robertson told a Sunday newspaper.

"There will be tough sales and perhaps no growth."

His warning came despite a flurry of retailers due to report glowing Christmas results this morning, with details of new store openings to defy the gloom.

Department store chain House of Fraser – which also owns Edinburgh's Jenners – is expected to report today on its "best Christmas yet", while the Co-operative is also expected to report sales growth at its grocery chain.

Discount fashion chain Peacocks will post a 17 per cent like-for-like sales rise for December and early January, highlighting the success of a range of clothes designed by former singer Pearl Lowe.

The chain said it planned to open about 40 stores in 2010-11, compared with 28 in 2009-10, adding to its existing 546 shops.

Chief executive Richard Kirk said: "Peacocks has enjoyed a cracking Christmas as customers decided they were going to celebrate after a year of doom and gloom."

Online, – which sells designer clothes including garments by Dolce & Gabbana, Mulberry and Polo Ralph Lauren – also enjoyed a busy festive season, with like-for-like sales up 121 per cent in December, the first month in which the company turned over more than 1 million.

Meanwhile, discount chain Poundland will this morning hail a 4.4 per cent rise in like-for-like sales in the five weeks to 3 January, with new stores contributing to a total sales jump of 34.8 per cent.

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Europe's largest single-price retailer will offer full-time post to 360 of the temporary staff it recruited over Christmas, while also unveiling plans to open eight further stores before the end of March, creating an extra 250 jobs and adding to its chain of 254 shops.

During the Christmas sales period, Poundland said it sold three million crackers, 1.1 million single Christmas cards, more than one million packs of batteries, 2,237 miles of tinsel and 10,500 miles of wrapping paper.

The BRC is tomorrow expected to reveal that sales across the whole of the UK retail sector for last month were at least 4 per cent higher than in December 2008, a figure flattered by comparisons with depressed conditions last year and after some shoppers brought forward purchases ahead of the 1 January value added tax (VAT) increase.