The majority of shops in the Midlands will stock moderately to avoid being caught out this Christmas as consumers are bombarded with mixed messages about the economy.
Despite reports of an increase in like-for-like sales in June, the majority of retailers in the midlands are once again planning to stock moderately for Christmas to prepare themselves for potential dips in consumer confidence, say retail experts at PricewaterhouseCoopers LLP (PwC).

Many shops are planning to launch their Christmas ranges as early as possible this year to take advantage of consumers who are spreading their spending. While the report may refer to retailers in the midlands, the trend could be observed across the UK. London-based department store Selfridges has already launched its Christmas range, opening on August 2 this year.

PwC's Andy Lyon said: "It's a case of once bitten twice shy. Many retailers were caught out in Christmas 2008 and left with goods that they were unable to sell. In 2009, they stocked more conservatively and this paid off with an improvement in profitability and they are expected to take a similar approach this year."

Recent reports about house price volatility will be particularly unsettling for consumers. PwC's UK Economic Outlook report, published last month, stated that there was a 70% chance that house prices would not have recovered to 2007 levels by 2015. The impact of imminent public sector cuts is also a concern for many households.

In contrast, PwC explains that a number of consumers are feeling better off - enjoying higher levels of disposable income than they were at the start of 2008 - thanks to the reduced cost of mortgages.

Consumers in this group could boost sales of big ticket items, such as furniture and TVs in the run up to Christmas, when faced with the prospect of a 2.5% increase in VAT in January 2011. However, PwC anticipates that this 'VAT-effect' will be muted by continuing uncertainty about the state of the UK economy.

Mr Lyon added: "Consumers are getting a lot of mixed messages about the economy and they are concerned about spending cuts and possible house price movements. In such conditions, they are unlikely to increase their spending in the run up to Christmas and retailers will be forced to plan accordingly.

"We are heading for an austere Christmas. However, there will be pockets of strong retail performance as consumers continue to look for value for money by either shopping at value stores or by selecting from value ranges."