Will Christmas 2010 be the best in three years?

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Or will spending be dampened by the VAT rise and spending review.

Retail analyst Verdict has forecast that 2010 will be the best Christmas trading period since 2007. In a research report released in October it stated that it expects sales to increase 1.9 percent to £85.2 billion with consumers spending an extra £1.6 billion.

Dominic Gomersall, managing director of Leicester jewellers Lumbers, agrees with the Verdict findings. He is expecting a strong Christmas with a higher volume of sales compared with previous years that have relied on low-volume high-value sales. “Due to the banking crisis last year we were reliant on fewer larger sales whereas this year in relation to volume we are 40 percent up on last year’s figures,” he said. “This year is certainly looking increasingly positive as we are selling in volume instead of waiting for the purchase of a six-figure item.”

Andrew Ransford, owner of mini chain Hiho echoes Gomersall’s optimism but believes that poor weather conditions could stop shoppers venturing onto the high street. “What we are hearing is that it is going to be tough weather and that will affect people’s ability to get out and shop,” he said. “I also know that a firm specialising in close-downs is out and hiring hard. Having said that, I think that it is a great boost to hear some positive spin and we believe that it will be a great Christmas and are looking forward to it with relish.”

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Steve Bennett, chief executive of online jewellery retailer Coloured Rocks and new owner of Gems TV, said that he has experienced slower sales of gold jewellery in the build up to Christmas but added that fashion jewellery is flourishing. “Silver jewellery, especially big-look fashion pieces, is literally flying off the shelf,” he said. “Last month alone we shipped over 107,000 pieces.”

Nathalie Kabiri, co-owner of fashionable jewellery retailer Kabiri, has noticed potential festive shoppers trying on its trend-led jewellery pieces. “Fingers crossed it will happen,” she said. “September has been slowish for us, but we have noticed lots of pre shopping with clients in store trying on so hopefully this will translate to a good Christmas.”

In addition to lower-priced items and fashion-led jewellery being festive bestsellers, Gomersall believes that brands that have invested in consumer advertising in the run-up to Christmas will sell well in stores. “Due to the support brands such as Breitling, Chopard and TAG Heuer offer with regards to advertising they will reap the rewards at Christmas time and other brands that have failed to commit to advertising spend will endure a tough time in the next two months,” he said.

Ogden of Harrogate director Robert Ogden said that he is expecting a strong month’s trading in December but is preparing for a “January hangover” due to the planned VAT increase to 20 percent. He said: “We’ve been here before. Last year was a record December followed by the most appalling weather in January. We are certainly feeling bullish and stocking at the level we were this time last year.”

Beaverbrooks director Daniel Brown believes that the VAT increase in January will actually help to bolster sales in the run up to Christmas. “This year has been reasonably healthy and, despite the negative stories in the media, consumers appear to be fairly buoyant,” he said. “Adding in people buying ahead to avoid the VAT increase, there are reasons to feel confident about this Christmas.”

Ian Middleton, director of Oxford-based retailer Argenteus, said “trade has held up well overall” but believes that the Verdict report might be little more than optimism. “I’m having a hard time believing that the assessments of a buoyant Christmas are anything more than wishful thinking,” he said. “Whilst I’m not expecting things to be any worse than last year a shift such as 1.9 percent could almost be described as marginal. It’s not exactly epiphanic is it?”

Middleton also feels that the current spending review and potential job cuts that it will bring will hang over consumers’ heads. “I think things were a bit further ahead last year but with the spending review on everyone’s minds and TV sets over the past week or so I think there’s been a lot of people keeping their powder dry until things were a little more certain either way,” he said. “It’s still too early to call though, especially after the news of sweeping redundancies starts to sink in. We’ll either be looking at a last hurrah or a carry-on-regardless scenario as we did after the initial panic following the bite of the credit crunch.”

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