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European retailers see little joy
LONDON, England (CNN) -- European retailers are bracing for what could turn out to be a joyless holiday sales season. Despite signs of brisk shopping in the final few days of the year, there are growing fears that overall activity in the key Christmas period will fall short of expectations. Already major retailers and industry groups are sounding the alarm bells. Wal-Mart Stores, the world's biggest retailer, underlined the concern within the sector on Thursday by cutting its December sales outlook. It said volumes at stores open at least a year -- a closely watched retail measure known as same-store sales -- would be up 2 to 3 percent, compared to an earlier forecast calling for 3-to-5 percent growth. In the UK, a survey by research group FootFall found that more than 7 percent fewer shoppers visited major retail outlets during the last weekend before Christmas than a year earlier. The survey was compiled from 100 shopping centres and 5,000 retail outlets throughout the country. "Retailers have been waiting for a last minute shopping splurge but... figures indicate that their Christmas wish has not come true,'' David Smyth, marketing manager at FootFall, told Reuters. "Monday and Tuesday will now be crucial in reviving the level... that we have seen to date.'' In Germany, the leading industry organisation HDE was also downbeat about sales, saying retail activity was expected to fall about 3 percent in 2002 on an inflation-adjusted basis.
But it said the surge in last minute shopping would help bolster sagging sales slightly. "After the pick-up of sales in Christmas shopping, retailers have a little hope for the time. Not everything is lost yet,'' Hubert Pellengahr, spokesman for the HDE retailers organisation, told Reuters. As a result of weak retail sales, Pellengahr said the sector was looking at a combined loss of 60,000 jobs this year and in 2003. Another German retail organisation, BAG, said its members were "reasonably satisfied'' with this year's Christmas business even if volume was down from the previous year.
"We weren't up to the level of sales of a year ago but the German consumer did not completely let Christmas go by. The reluctance to buy, which we have seen for the past year, make us fear for the worst,'' BAG chief Johann Hellwege said in a statement. And in Italy, the main consumer group said retail sales during the festive season were "a flop," saying purchases fell 20 percent from the Christmas period a year earlier. Economists fear the sector will continue to suffer well into next year as the global economy struggles to recover. "The U.S. is the world's engine of growth and when that splutters we should all be worried," James Stewart, economist at Weavering Capital, told CNN. "The early retail sales reports from Europe's four biggest economies, that's Germany, UK, France and Italy, have not been encouraging," he said. "Double-dip recessionary fears are growing. I believe Germany may miss a recession but to German consumers it will feel like one. The European Central Bank should cut interest rates in the first quarter to stimulate growth."
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Early retail sales reports have not been encouraging.
