According to the BRC, the trade body for store groups, reports almost two-thirds of retailers responding to a survey of prospects expected sales to worsen, compared with 2010. Some 18 percent expect an improvement.
"Our snapshot shows retailers expect a difficult December to be followed by a tough 2011,” says Stephen Robertson, director general of the BRC. “They believe the VAT rise will contribute to higher prices, and, with fears about government cuts and the wider economy, people will be put off spending." Retailers are also dealing with upward pressure on clothing prices, due primarily to the soaring cost of cotton, although inflation in China and exchange rate headwinds are also feeding into increases.