Furniture sales rise but rain sees clothes take a back seat

Published on Monday 10 August 2009 21:39

A LIFT in the housing market combined with wet weather last month sparked the best growth in furniture sales in three years, new figures from the British Retail Consortium (BRC) today revealed.

Across the UK retail sector, sales in July were 1.8 per cent higher than a year ago on a like-for-like basis despite a slowing in growth in food and clothing as heatwave conditions were replaced by wet weather.

Stephen Robertson, director general of the BRC, said: "July showed us both sides of the British summer and gave some parts of retailing a much-needed boost."

Howard Archer, chief UK economist for IHS Global Insight, said a positive survey for July boosted mounting hopes that the economy will grow in the third quarter.

He added: "With sharply reduced mortgage payments, lower utility bills and retreating inflation-boosting purchasing power, it seems that a good many people are currently more able and more willing to step up their discretionary spending."

But he warned that "serious concerns" remained about the longer-term prospects for consumer spending as unemployment increased, pushing up debt levels and reduced earnings growth.

As well as the poor weather and tentative signs of recovery in the housing market, the BRC report noted that furniture and homeware departments were boosted by people using holidays to improve their homes rather than to go away.

Sales in the furniture and floor coverings sector showed the best growth since May 2006, although this was achieved against a very low base in July last year. Home accessories and house textiles also reported a strong uplift, helped by strong demand for clearance bargains.

While the report's overall headline figure was stronger than the 1.4 per cent seen in June, the BRC cautioned that last month's comparisons with 2008 were much easier. Across the May to July period, like-for-like sales were 0.8 per cent higher.

Robertson added: "There is a sense among some that the beginning of the end of recession is here but rising unemployment and job loss fears will continue to hold back the widespread return of consumer confidence for some time yet."

The BRC said after June's heatwave boost, clothing sales fell back to just below their 2008 level. Further and deeper discounts were needed to tempt shoppers to add to their summer wardrobes, although in the cooler and very wet second half, new autumn and winter lines made a good start.

Food sales growth fell back, partly reflecting lower food price inflation and a shift to cheaper wintery foods from salads, deli and barbecue foods.