Price slashing fuelled an increase in retail sales in January but this overall boost is hiding a mixed outlook, it has been claimed.
The latest figures from the British Retail Consortium (BRC) showed that January’s retail sales rose 2.6% on a like-for-like basis compared with last year, when sales were up 3.1% on January 2006.
However, the BRC warned that consumer confidence is plummeting, particularly when it comes to committing to major purchases, which has caused customers to become highly price sensitive.
Stephen Robertson, director general of the BRC, said:
“Following three months of weak year-on-year growth, this appears to be significantly better but the figures don’t mean consumer confidence is reviving yet. The headline results conceal a mixed picture.”
For example, despite the famous January sales, clothing purchases were down on a year ago for the fourth month running. Conversely, food sales picked up after slowing down in December.
Robertson added: “New Year home updating helped sales of large electricals, furniture and flooring but retailers’ margins were hit as it took heavy discounting to release pent-up customer demand.”
Commenting on January’s figures, Helen Dickison, head of retail at business advisory firm KPMG, added that it was too early to tell what the rest of 2008 would have in store for UK retailers.
She said: “The growth of 4.9% in total and 2.6% in like-for-like sales was heavily skewed by a strong performance in week one, as January sales absorbed demand carried over from a poor December, which then deteriorated as the month progressed.”
© Crimson Business Ltd. 2008
