High street suffers worst January for 15 years

Published on Monday 8 February 2010 20:36

THE high street suffered its worst January in at least 15 years after snow and economic woes hurt sales.

• Consumers have not been attracted to the sales in enough numbers to save some retailers. Picture: Getty

According to new figures from the British Retail Consortium, the "awful" start to 2010 followed the strongest December for eight years and dampened hopes of a strong retail recovery.

Total UK sales rose 1.2 per cent on a year earlier in the month, the lowest ever reading for the month since the BRC's Retail Sales Monitor began in 1995.

Same-store sales values fell 0.7 per cent in January compared with the same period last year, which was the worst figure for 14 years.

The figures are much lower than economist expectations of total sales growth of 3.3 per cent and like-for-like increases of 0.5 per cent. They are also steeply down from the respective rises of 6 per cent and 4.2 per cent seen in December.

Severe weather kept shoppers off the high street at the beginning of the month, while the impact of a higher VAT rate and economic uncertainty also saw consumers focus on essentials at the expense of other items.

Chilly weather provided a boost to food sales at the start of the month and consumers stocked up on frozen and tinned food amid concerns about the impact of heavy snowfall.

Pies, pizzas and puddings were also on the menu as customers sought comfort from the cold.

Internet sales were higher amid the snow disruption, with non-food sales including mail order and telephone orders up 14.6 per cent in January. But the heavy snowfall also stopped

consumers hitting the shops and discretionary items were scratched off people's shopping lists.

Clothing was lower than in December and the cold spell saw customers focusing on outerwear, woollens and skiwear.

Boots of all kinds were in vogue during the colder weather, while in an otherwise depressed homewares market, electric blankets and bedding saw gains.

The effects of recession were still being felt in customers' wallets as sales and discounts drove purchases in areas like department stores and home electronics.

DIY was among the worst performing sectors in the cold snap as householders put off outdoor chores until milder weather returned. Sales of shovels, salt and grit were "excellent", however. Furniture also underperformed in the month, with sales sharply below already weak levels the year before.

The declines were the worst since last March as consumers concentrated on essentials, although clearance discounts on fitted kitchens and upholstery did provide a rare uplift.

Stephen Robertson, BRC director-general, said: "An awful start to the year and in stark contrast to an upbeat December. This is the worst January sales growth in the 15 years we've been running the survey."

He said the higher rate of VAT at the start of the month had caused some consumers to make their purchases in December, but shoppers were also becoming more cautious "in the face of economic and political uncertainty".

"Retailers will be hoping these results are mainly a snow-induced blip, rather than an indication of further difficulties," he added.

Helen Dickinson, head of retail at KPMG, which co-authors the report, said January's results were partially flattered by higher shop prices because of the VAT hike.

"The underlying trend is difficult to read but there is no doubt that the strong sales we saw in December 2009 are not indicative of the trend for the rest of this year," she added.