Retail slump hits sales in run-up to Christmas


Retailers across the capital are feeling the pinch as sales figures fall below last year’s rises

UK retail sales are disappointingly low compared with last year’s figures, it has been announced. Sales values for October 2011 were 0.6 per cent lower on a like-for-like basis from October 2010. Sales in the run up to Christmas rose only 1.5 per cent last month, compared with 2.4 per cent for the same period last year.

The growth in food sales has slowed and non-food sales have also weakened. Clothing and footwear were hit by the unseasonably mild weather in October, with more expensive items suffering the most.

“Which part of the wave we’re riding varies from month to month but the water is consistently chilly,” said Stephen Roberston, director general, British Retail Consortium. “For a fifth month, total sales growth continues its strangely regular flip-flopping between 2.5 and 1.5 per cent.

“But the year-to-date figure, which smoothes out these minor moves, is unchanged from the previous month. This is evidence of the basic weakness of consumer confidence and demand and worrying this close to Christmas.”

Bucking the trend, online sales picked up a little in October after a slight fall in September. Sales were up 11.5 per cent on a year ago, more than the 10.1 per cent in September but less than in August.

“Online sales growth is up on September and still beating store sales performance by a wide margin, but mounting pressure on customers’ disposable incomes has noticeably weakened the underlying pace of that growth,” said Robertson.

“In the 12 months to this October it averaged 12.1 per cent, noticeably less than the 17.2 per cent over the 12 months before that. The basic expansion of internet shopping continues but sales values are not rising as quickly as they were because customers don’t have money available and, even where they do, are less likely to buy goods that aren’t on special offer.”  

 Uncertain prospects for personal finances and the economy are being blamed for the slump in sales. Shoppers are giving priority to essentials over discretionary items.

“With so much uncertainty across Europe and global markets, UK consumers remain reticent as their personal finances become harder to manage,” explains Helen Dickinson, head of retail, KPMG.

“To whatever extent sales are being made, margins and hence profits are being impacted to stimulate demand as retailers strive to cope with the new reality. The success of the Christmas season for retailers hangs in the balance as October’s results do not set a strong foundation.”