• Christmas sales forecast to hit £44.7 billion, compared to £43.9 billion in 2008, a year-on-year increase of £832 million
• Consumer confidence has improved from unprecedented depths of -18% last summer to 5% now and retail confidence has risen from -46 in December 08 to -1 currently
• Industry 'cautiously optimistic' following 'Black Christmas' of 2008, when sales fell £-27 million, resulting in 20 major retailers going into administration, the loss of 40,000 jobs and shop voids rising to 10%
• Christmas retail sales expected to represent 18.5% of total retail sales for 2009
• Welcome boost could result in up to 4,500 new jobs by January
• Online spending to reach £8.9 billion this Christmas, representing 20p in every £1 spent - equivalent to 20% of ALL UK sales and a 24% increase on previous year
• The first 'Online Christmas' where 50% of purchases are online predicted for December 2015

3rd November 2009: Gordon Brown's hopes of a Christmas economic recovery were recently dashed as new figures from the Office of National Statistics (ONS) showed that Britain is in the grip of the longest period of continuous decline since 1955. The economy shrunk by 0.4% in the last quarter and by 5.9% overall in the last year as the UK officially entered its longest period of recession in 54 years. But according to Kelkoo, the shopping comparison site, the retail industry may have cause for celebration this Christmas as consumer spending makes tills ring again - sales are predicted to reach £44.7 billion, a year-on-year increase of 1.9% or £832 million.
The report, 'Christmas 2009: Blue Skies or Storm Clouds', commissioned by Kelkoo and carried out by the Centre for Retail Research, reveals that the boost will bring welcome relief to retailers and have a positive impact on the broader UK economy, potentially resulting in 4,500 jobs by January.

The news coincides with the Confederation of British Industry's (CBI) announcement last week that retail sales in Britain grew at their fastest rate in nearly two years in October. Some 41% of retailers said sales volumes rose, compared to 33% reporting a fall. The industry also claimed to be optimistic about sales volumes in November, with sales balances expected to improve by 19%.

Online spending at Christmas is also set to receive a boost this year compared to conventional stores, rising from £7.2 billion in 2008 to £8.9 billion in 2009, which equates to 20p in every pound and a 24% increase on last year's figures. Online spending as a whole continues to fare well, despite the recession. Online sales have increased dramatically in the past decade from £31 million in 2000 to an estimated £8.9 billion this Christmas.

Based on historic data trends, if we assume that online will continue to grow at a rate of 24% year-on-year and all retailing at 6% annually, then Kelkoo projects that the UK could have its first 'Online Christmas', where 50p in every £1 is spent online as soon as 2015 ? equating to £32.6 billion in online sales and accounting for 50% of all retail spending. 

The projections are in stark contrast to last year's 'Black Christmas', when sales fell by -£27 million, resulting in thousands of lost jobs and household names like MFI, Zaavi and Woolworths going into administration. In all previous years for the past decade, there have been huge increases in sales ranging from £850 million to as much as £2.2 billion. Christmas sales have traditionally accounted for between 18.4% of total annual retail sales and 19.5%. In 2009, sales in the six weeks to Christmas are expected to account for 18.5% of total annual retail spending.

Bruce Fair, Managing Director of Kelkoo UK, comments: "The peak weeks of Christmas trading are vitally important to retailers as many earn up to 60% of their profits during this period. In addition, the retail sector is a major contributor to UK plc employing almost 12% of the working population (3.4 million adults), and responsible for annual retail sales of £282 billion - 19.5% of GDP. The retail industry is seen by economists as a leading indicator of economic trends and results this Christmas will prove critical in stimulating retail growth and aiding the nation's economic recovery as a whole."

Christmas and Annual Retail Spending 1999 - 2009 (Forecast)

(source: calculated from ONS, Retail Statistics). Christmas defined as 6 weeks from mid-November.

The Importance of Christmas
Christmas and the January sales account for 23% of annual retail sales over a ten week period. Every year Christmas gives a significant boost to retail sales by between 29% and 36%. Christmas spending (the last six weeks in the year) rose from £33.3 billion in 1999, to £43.9 billion in 2008 and is expected to rise to £44.7 billion this year. Christmas spending accounts on average for a little under one-fifth (19%) of total retail spending. With the exception of last year, Christmas usually brings a large increase in spending by shoppers, averaging £1.1 billion over the last nine years.

In 2008, which was marred by a fall in sales of -£27 million, 20 retailers went into administration and more than 40,000 store workers were made redundant. While this only represented a sales fall of 0.062% compared to the same period in 2007, it had a disastrous impact as growth in previous years had been extremely strong, and the credit crunch meant that profitability had been reduced throughout 2007 in the months leading to Christmas

Factors Likely to Affect Christmas 2009
There are some encouraging signs pointing to why Christmas retail sales should be much improved compared to last year and attain the anticipated £44.7 billion forecast.

• Firstly, the UK is moving slowly out of recession and growth, however weak, has started.
• The fall in the sterling exchange rate is also expected to improve prospects in manufacturing and encourage overseas tourism.
• Retail sales have started to show signs of recovery. The CBI announced a year-on-year uplift of 4% for sales in the first half of September, following four months of decreases, and only last week it reported that retail sales grew at their fastest rate in nearly two years during October 8.
• Consumer confidence has improved from unprecedented depths of -18% (July 2008) to +5%, while retail confidence according to EUROSTAT has risen from -46 (Dec 2008) to -0.8 currently and is expected to improve further by the end of the year.
• Retailers are 'fit for Christmas' this year. They have planned carefully, ensuring that prices are competitive, there is a good range of merchandise, and have avoided overstocking so there will be less need for discounting.
• There is some evidence already of great consumer interest in Christmas: Selfridges, Harrods, Fortnum & Mason, and Debenhams started selling Christmas ranges by August; and during August, tinsel sales on eBay were reported to have increased 240% and Christmas cards 191% year-on-year.
• VAT in UK shops will rise from 15.0% to 17.5% on 1 January 2010.
• In addition, extremely low interest rates have provided substantial bonuses to people with mortgages.

Bruce Fair, concludes: "It's been a very tough year for retailers around the UK, so a busy Christmas is the news they've all been waiting for. There's been talk of green shoots for some time now, but it's taken a while for retailers to see any clear signs of a recovery. A seasonal cash injection will help to create jobs and generate a renewed sense of optimism across the sector. Only last week it was confirmed that Best Buy, the American electricals giant, will be opening its doors next spring in Britain creating 8,000 new jobs.

"A good Christmas will improve retail profitability, stimulate the economy, create jobs and increase consumer confidence. If the country suffers another poor Christmas, some retailers will fail to survive the blow and it will indicate that economic prospects for the next year are likely to be limited."