High street sales have defied wintry weather to post year-on-year growth at the start of the all-important December holiday retailing season, according to research from the Confederation of British Industry (CBI).
High street sales have defied wintry weather to post year-on-year growth at the start of the all-important December holiday retailing season, according to research from the Confederation of British Industry (CBI).
The latest CBI Distributive Trades Survey finds 67 per cent of retailers report sales for the start of December are higher than a year ago compared with 11 per cent who say the number of customers have fallen away. The remainder say there has been no change.
Hardware and do-it-yourself shops, clothing and non-specialised retailers, such as department stores and grocers, top the list reporting an increase in revenue, according to the survey which questioned 121 companies between 25 November and 8 December.
The balance between positive and negative sales results, +56 per cent, is the highest positive response by retailers since April 2002 when a difference of +57 per cent was recorded. It is also the sixth consecutive month of reported sales growth in the survey and comes despite the disruption the snow and bad weather caused across the UK earlier this month.
But the rosy picture is not expected to continue into next year, with retailers expecting sales growth to slacken in January with a balance of +35 per cent predicting sales to be higher than a year ago. Analysts say the rise in VAT to 20 per cent on January 4 will hit many retailers.
CBI chief economic adviser Ian McCafferty says: ‘Sales on the high street continued to rise strongly compared with a year ago, reflecting a stronger crucial pre-Christmas trading period.’
But McCafferty adds, ‘December’s strong survey balance is also likely to capture spending being brought forward, ahead of the January increase in VAT. Indeed, retailers expect sales growth to lose some momentum in the new year. We remain cautious about prospects for the retail sector further ahead, given ongoing uncertainty over the resilience of consumer spending.’
IHS Global Insight chief UK economist Howard Archer comments that the ‘the overall impression’ ahead of the key Christmas shopping period is retail sales are ‘reasonable but unspectacular’. Archer warns there is concern consumers will limit their spending in 2011.
Archer explains: ‘December is the really key month for retail sales, and the robust CBI survey indicates that sales have been healthy overall so far despite the disruption to shopping caused by the snow.
‘The problem for retailers stems not just from the bad weather stopping people getting to the shops but in the disruption it causes to supply chains.’
