Small shops suffer festive letdown after their till bells fail to jingle

THE tills failed to ring this Christmas for Britain's army of small shopkeepers, according to official figures showing the weakest high street growth in 11 years.

A large rise in prices would appear to have deterred shoppers from splashing out, while big-ticket purchases failed to fly off the shelves before the temporary cut in VAT was reversed on New Year's Day.

Data from the Office for National Statistics (ONS), released yesterday, showed retail sales volumes rose just 0.3 per cent last month, less than a third of the 1.1 per cent increase analysts had expected. It marks the weakest growth for the month of December since 2007. Year-on-year volume growth was 2.1 per cent – the lowest annual rate for December since 1998.

The disappointing numbers follow upbeat survey data from the British Retail Consortium and a host of positive trading statements from major high street names including Sainsbury's, Next and Marks & Spencer.

David Kern, chief economist at the British Chambers of Commerce, said the weaker-than-expected ONS figures pointed to a "more challenging" Christmas season than initially indicated by the larger retail chains.

"Although the figures are still consistent with a return to positive economic growth, it is clear that any recovery remains fragile and patchy, he said.

"These figures suggest that smaller, independent retailers – those outside the major chains – are facing the biggest hurdles."

Yesterday's data showed that sales values were up 3.6 per cent year-on-year – the second highest for the month since 2001 – suggesting far less discounting on the high street as retailers held prices at the expense of volumes.

The figures also go some way to explaining the sharp rise in consumer price inflation in December. BNP Paribas economist Alan Clarke said: "A lot of the comparison is with a year ago, which was very weak."

The big winners were food stores and online retailers.

Grocers saw volumes up 2.8 per cent year-on-year, while non-store retailing and repair – mainly internet shopping sites – lifted sales volumes by 9.4 per cent.

Separate figures yesterday from online shopping industry body IMRG and consultancy Capgemini showed internet retail sales rose 17 per cent year-on-year in December to 5.46 billion, ahead of the 2009 average growth rate of 14 per cent.

Experts forecast growth of 13 per cent in 2010, despite concerns over the economic outlook.

Sales of accessories, gifts, electrical goods and health and beauty products all rose strongly last month, the survey noted.

IMRG chief executive James Roper said: "2010 looks set to produce another year of strong results for e-retail, with demand expected to remain high as consumers habitually look online for best buys, and a pipeline of significant improvements emerge, including wider product range availability, even better websites and a greater choice of convenient and more reliable delivery options."

A 13 per cent month-on-month rise in sales at so-called "multi-channel" retailers, which also operate bricks and mortar stores, contrasted with an 8 per cent fall at internet-only companies.