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High street fears for festive season as sales collapse

Retail sales hit a six-month low in November as cash-strapped consumers curbed spending, including online, despite Christmas approaching.

While the unseasonably warm weather dealt a blow to sales of winter clothing, the British Retail Consortium and KPMG survey warned that "the health of UK retail is deteriorating".

Chains resorted to "high levels" of discounting to generate sales, it added.

Despite higher prices across the sector, like-for-like sales fell 1.6 per cent last month – the worst showing since a 2.1 per cent fall in May, according to the BRC-KPMG Retail Sales Monitor.

Total sales growth of just 0.7 per cent, boosted by the contribution from new stores, was also a six-month low.

With Christmas Eve falling on a Saturday, retailers hope for a last-minute spending spree. But for many it will come too late and will not compensate for a disappointing "golden quarter", in which chains make the bulk of their annual profits.

Helen Dickinson, head of retail at KPMG, said: "The latest figures prove once more that the health of UK retailing is deteriorating.

"Christmas is a crucial trading period for the UK retail sector but this year many retailers will be nervous and unsure how the season will pan out. Cash-strapped consumers continue to be reticent and last week's gloomy economic forecast by the Chancellor won't help to boost confidence levels.

"Any sales are hard won, with high discount and promotions."

The impact of the mild weather was particularly damaging for retailers of winter clothing and footwear in November, in contrast to the cold snap in November last year.

While these chains were also hit by uncertainty about jobs and household finances, the downbeat economic picture was felt most acutely by retailers selling big-ticket homewares and furniture products. There was also little change form the five-month low in food sales growth seen in October.

A PricewaterhouseCoopers survey found retailers advertising average discounts of 39 per cent last week, close to the 40 per cent seen in 2008.