Rising sales offer ray of hope for struggling high street

Published on Monday 9 February 2009 20:57

A SURPRISE rise in retail sales, promoted by heavy discounting and a surge in food prices, has brought a glimmer of hope to Britain's beleaguered high streets.

Figures published today show that the value of retail sales across the UK increased by 1.1 per cent on a like-for-like basis in January compared to a year ago.

The rise, the first for three months recorded by the British Retail Consortium (BRC), led the trade body to claim there was now "room for optimism" on the high street.

However, it was also quick to point out that the increase could be a short-lived "blip" and it would need further monthly survey results to establish the trend for this year.

According to the survey, like-for-like food sales rose by 5.1 per cent, with prices rising again following heavy discounting during December.

Sales of "comfort foods", casserole meats and sausages rose, along with home-baking ingredients.

The BRC said the rise in this category reflected the fact that more people were cooking at home, prompted by books and television series by celebrity chefs, such as Nigella Lawson.

Like-for-like non-food sales slid by 1.6 per cent, far less than the 7.9 per cent fall reported in December's BRC retail sales monitor, which is compiled with accountancy firm KPMG.

Clothing, footwear and furniture sales were all down, but the BRC said the purchase of sewing machines was "very popular".

Shoppers splashed out during the January sales, but transactions trailed off towards the end of the month, the BRC added.

Stephen Robertson, BRC director general, said: "These surprisingly good figures give some room for optimism. Overall sales growth turned positive and is higher than since last May."

He added: "Non-food sales fell more slowly suggesting January clearance deals released pent-up demand and customers started to spend on goods they've been intending to buy for months.

"But the fundamentals haven't changed. Job fears are mounting. Consumer confidence is at record lows. It remains to be seen whether January's discount driven growth was just a blip."

Helen Dickinson, KPMG's head of retail, added: "The figures don't mean consumer confidence has returned.

"The results are heavily skewed by food prices creeping back up again after the heavy promotional activity in December and by a reasonably strong performance in the first week of the month, caused by the continuation of a pick up in spending immediately after Christmas."

Last month, figures from the Office of National Statistics (ONS) suggested that retail sales volumes had increased by 1.6 per cent in December, contradicting the CBI's distributive trends survey for the month.

But analysts and the ONS warned the official figures could have been skewed by the UK government's VAT cut and rampant pre-Christmas discounting.

Today's sales monitor from the BRC said total sales had risen by 3.2 per cent compared with January 2008.

January's figures from the Scottish Retail Consortium are due to be published next week.