Discounting and a dash to beat VAT rise lift retail sales

Retailers posted their biggest rise in underlying sales for 10 months in January, suggesting that gloomy forecasts of a dire first quarter may be wide of the mark.

But high street chains warned that they received a boost from pent-up demand after the heavy snowfall in December, a surge in spending ahead of the VAT increase and continued heavy discounting. They also benefited from comparisons with weak sales in January 2010, when sales also suffered from heavy snowfalls.

Nevertheless, the British Retail Consortium and KPMG Retail Sales Monitor survey showed a healthy 2.3 per cent rise in like-for-like sales, which represents the best performance since the 4.4 per cent growth in March 2010.

Stephen Robertson, the director general of the BRC, said: "On the surface, this is the best sales growth since last March, but that's not the whole story. Comparisons are with a feeble, snow-hit performance a year ago."

He added: "Growth this January was driven by a relatively short but strong burst of non-food buying early in the month. Clearance discounts and a last chance to beat the VAT rise got people buying things like furniture and electricals in the first few days."

Total retail sales jumped by 4.2 per cent in January, said the BRC. Many sub-sectors, including homewares, furniture and DIY, performed strongly, although sales growth at grocery and footwear chains slowed.

Helen Dickinson, the head of retail at KPMG, said: "The divergence between food and non-food narrowed in January, partly due to the VAT rise, and interestingly it was the sectors that had been struggling over the previous quarter, including furniture, DIY and home-related areas that picked up more strongly than clothing."

The BRC-KPMG survey is the latest indicator that consumer spending is holding up better than expected, after the 0.5 per cent fall in UK economic output in the final quarter of 2010. Yesterday, the accountancy firm BDO's High Street Sales Tracker found that like-for-like non-food sales jumped by 9.1 per cent at mid-market retailers in January, although growth slowed significantly in the second half of the month. In a separate survey, MasterCard said total sales rose 3.8 per cent, driven by a bullish performances at department stores, clothing and furniture chains.

However, the BRC warned that non-food sales growth waned in the second half of January, as pressures on household budgets, from record petrol prices to the rise in VAT, hit home.

Mr Robertson said: "Later in the month sales of non-food goods slowed, particularly for bigger items, as the reality of worries about jobs and personal finances returned to customers' minds."

Ms Dickinson also had her cautious hat on. She said: "Falling disposable incomes will continue to exert pressure on sales in the first quarter of the year, traditionally the weakest period of trading as consumers cut back on spending post-Christmas."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Guru Careers: .NET Developer / Web Developer

£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence