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News - 17 January 2010

Christmas retail sales figures

UK retail sales values rose 4.2% on a like-for-like basis from December 2008, when sales had dropped 3.3%, due to turmoil in financial markets hitting consumer confidence.

Food sales growth picked up to its strongest since June, partly reflecting higher food price inflation. Wintry weather gave a good boost to clothing and footwear. Homewares sales showed further gains but against larger declines a year ago. Furniture slowed but health and beauty picked up, helped by Christmas gifting.

Non-food non-store sales (internet, mail-order and phone sales) in December were 26.5% higher than a year ago compared with 16.9% in November. Some benefited from shoppers buying online when snow prevented them getting out.

Stephen Robertson, Director General, British Retail Consortium, said, "These are stronger figures than we dared hope for. After a surprisingly muted November, this is the best total sales growth for a December since 2005 and goes well beyond just making up for the sales fall the sector suffered a year ago. The figures were certainly helped by the comparison with last December's terrible results but customers clearly felt more confident about spending than they have for some time. Sales growth was also helped by the VAT cut dropping out of the 12-month comparison, December being the first and only month where the 15%t rate is the same as a year earlier."

"Snow kept people away from the shops for a time but they made up for that in the days just before Christmas and as sales events began immediately afterwards. But, with customers now reacquainting themselves with concerns about jobs and tax rises there is a risk that a healthy December may be only a temporary respite on the painful road to recovery."

Helen Dickinson, Head of Retail, KPMG, said, "Christmas really provided an opportunity for strong retailers to 'strut their stuff' and, although the stream of trading updates has only just started, we will see a pronounced polarisation between retailers who got the proposition right and those that did not. However, the results are flattered by the impact of higher shop prices, given the reductions made in December 2008 following the VAT cut. But, despite this and despite the weather, the consumer demonstrated a strong desire to spend. All sectors, with the exception of furniture and flooring for which the upward trend of recent months slowed, performed well. December's results also showed the growing importance of post-Christmas trading but, given the economic outlook, they are unlikely to be indicative of the trend for the rest of the year."

Food & Drink - Joanne Denney-Finch, Chief Executive, IGD, said, "Food retailers enjoyed a good Christmas, despite the economic gloom, as shoppers welcomed the festive opportunity to treat themselves and their families, splashing out on premium lines and luxuries once more.

"In spite of bad weather and lower inflation than 2008, food retailers grew sales during one of the toughest Christmas periods they've ever faced, with volumes remaining robust. Retail supply chains coped successfully with the challenges of adverse weather conditions."

Non-Food Non-Store* - Sharon Hardiman, Head of Non-Store Retailing, BRC, said, "Christmas produced the strongest online sales growth of the year for non-food goods. Non-store sales are only about 4% of overall retail sales but growing much more rapidly as people become increasingly confident about shopping this way.

"The sharp increase in growth from November suggests customers are also more confident that online Christmas shopping can be left into December. For some, severe weather made shopping online more attractive than going out and starting online clearance sales early, even as the shops shut on Christmas Eve, got a good response from many customers."

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