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News - 18 December 2009

Sales down; retailers upbeat but will snow depress sales even more?

Reacting to the official retail sales figures from the Office for National Statistics (ONS) released on Thursday, the British Retail Consortium (BRC) said retailers are quietly confident of a better Christmas than last year despite sales values declining in November. But small retailers are more worried about the weather than macro-economics

Accoding to the ONS the volume of retail sales last month was down 0.3% compared to October. This was particularly disappointing as a rise of 0.5% had been anticipated. Balalnced against this John Lewis has reported the £110m it took last week is more than any other week in its entire history.

Richard Lim, British Retail Consortium economist, said, “Growth was weaker  but that’s largely due to the amount spent on food going up more slowly as customers benefit from food prices rising more slowly.

“November’s mild weather hit clothing sales. Clothing retailers were denied a clear start to the winter season from conditions turning cold. Things like coats, hats and gloves often went un-bought. Of course, that will all have changed as temperatures plummeted this week and snow arrived last night. 

“Consumer confidence can’t be taken for granted but generally customers are feeling more positive than a year ago. Considering Bank of England interest rate cuts can take up to 18 months to feed through, some of this is certainly the cumulative effects of lower mortgage rates now supporting spending. November saw more interest in items for the home and strong growth in internet sales as Christmas buying took off.

ECONOMIC PARTNERSHIP COMMENT

There is no doubt that the recession has proved to be a disaster for some retailers and an irrelevance for others. Although it has not been the single cause of failure for the likes of Woolworths, Borders and Zavvi, they would probably have survived a bit longer if the recession hadn't intervened.

Thanks to low interest rates, most people that still have a job are actually better off and, although unemployment numbers have risen over the past year, with all previous recessions the really big numbers have come after the recession ends. Unemployment has been a lagging indicator continuing to rise for 12 to 18 months but there is some evidence to suggest that this recession may be different with unemployment peaking as the recession ends. It remains to be seen whether this is just a blip and also if people losing their jobs will have a sobering effect on those that are still in work.

With a week to go before Christmas, many independent retailers will be watching the weather closely. The sudden snowfall seen today (with more predicted over the weekend) makes shoppers head for indoor malls to complete their Christmas purchases and that will have a knock-on effect for the smaller retailers outside in the snowy streets.


Read related items on:
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British Retail Consortium
Lim, Richard


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