Fears of a double-dip recession fade as retail sales rise in January

Experts still expect a testing year ahead despite positive figures

Fears over a double-dip recession appear to have receded after the high street enjoyed surprisingly robust trading last month, boosted by continued hefty discounting and catch-up shopping after December's snow.

But industry experts still expect a testing year ahead for retailers, with continued pressure on household budgets and mounting fears over inflation and unemployment, particularly in the public sector. Confounding fears of an early new year "bloodbath", mid-market retailers delivered like-for-like sales up 9.1 per cent in January, BDO's High Street Sales Tracker found.

The British Retail Consortium is also expected to report positive underlying sales growth for the sector in January, but its closely-watched monthly figures are not expected to be quite as bullish.

The better-than-expected start to the year for retailers will dampen expectations that the UK may slip into a double-dip recession this quarter, following economic output falling by 0.5 per cent in the final three months of 2010.

The accountancy firm BDO's retail survey found a strong performance strong across fashion, non-fashion and homewares chains in January, which grew sales by 10 per cent, 6.8 per cent and 10.5 per cent, respectively. Non-stores sales, primarily online, surged by 49 per cent, the highest growth rate for nearly a year. BDO estimates the internet now accounts for a £1 in every £5 spent by consumers.

Don Williams, BDO's national head of retail and wholesale, said: "The gloom can be over-played. It has not been a bloodbath on the high street."

He also noted the impact of the heavy snowfall in December that severely disrupted pre-Christmas trading. Mr Williams said: "There is an overhang of spending from before Christmas when people could not get to the shops because of the snow."

Retailers from HMV, the entertainment and book retail group, to Mothercare, the maternity specialist, blamed the snow for profit warnings and dire trading. BDO also cautioned that January was a "month of two halves" for retailers surveyed, which have sales between £5m and £500m. For instance, homewares chains enjoyed sales up by 27.9 per cent and 7.7 per cent, respectively, in the first and second weeks of the month, but sales actually fell by 2.3 per cent and 1.7 per cent in the second half of the month.

This is partly explained by UK consumers spending freely on big-ticket items before VAT went up to 20 per cent on 4 January, as well the extra bank holiday on Monday 3 January.

Mr Williams said: "This year has had a healthy start thanks to promotional activity around the VAT rise and the New Year bank holiday falling on a shopping day."

However, BDO pointed out that many retailers' sales were also flattered by being up against weak sales in January 2010, which was characterised by heavy snowfall, particularly in the middle of the month.

This trend towards slower sales growth appears to have been borne out by John Lewis, the department store and so-called bellwether for the sector. While John Lewis boasted barnstorming sales for much of last year, on Friday it said its sales dipped for the second successive week. Andrew Murphy, the retail director at John Lewis, said: "The year ahead promises to be even more testing, but we are budgeting for growth."

Some industry experts predict that the polarisation between the best-performing retailers over Christmas and those that struggled may be a feature of this year's trading.

Suggested Topics
Arts and Entertainment
A host of big name acts recorded 'Do They Know It's Christmas?' in London on Saturday
musicCharity single tops chart
Arts and Entertainment
Steve Backshall has become the eighth celebrity to leave Strictly Come Dancing
tv
News
people
News
peopleChildren leave in tears as Santa is caught smoking and drinking
PROMOTED VIDEO
News
ebooksNow available in paperback
Arts and Entertainment
tvStrictly presenter returns to screens after Halloween accident
News
peopleFormer civil rights activist who was jailed for smoking crack cocaine has died aged 78
News
i100
News
Boxing promoter Kellie Maloney, formerly known as Frank Maloney, entered the 2014 Celebrity Big Brother house
people
Sport
Dwight Gayle (left) celebrates making it 1-1 with Crystal Palace captain Mile Jedinak
premier leagueReds falter to humbling defeat
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

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible
Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

Look what's mushrooming now!

Meat-free recipes and food scandals help one growing sector
Neil Findlay is more a pink shrimp than a red firebrand

More a pink shrimp than a red firebrand

The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

Oeuf quake

Bill Granger's cracking egg recipes
Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

Terry Venables column

Wayne Rooney is roaring again and the world knows that England are back
Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

Abject leadership is allowing football’s age-old sores to fester

Those at the top are allowing the same issues to go unchallenged, says Michael Calvin