Gloomy retailers question accuracy of 'rosy' sales data

Economists and the British Retail Consortium yesterday criticised the Government's latest retail sales data for being "overly rosy" and not matching the harsh reality that shops and consumers are facing.

Total retail sales volumes rose by 0.3 per cent in November on the previous month, the Office of National Statistics (ONS) said, but this was far better than the 0.7 per cent fall in sales that economists had forecast.

Most high street chains launched record levels of pre-Christmas discounting last month to lure cash-strapped shoppers into their stores.

Vicky Redwood, a UK economist at Capital Economics, said: "The official measure of retail sales remains staggeringly resilient given the weakness of the anecdotal and survey evidence. These figures remain very hard to take seriously and we still think that Christmas will be pretty awful for retailers."

The consortium said that total retail sales fell by 0.4 per cent in November, the first time since its survey began in 1995 that monthly sales had fallen for two consecutive months.

Stephen Robertson, the BRC's director-general, said: "Most retailers won't recognise these surprisingly strong ONS retail figures. The idea that both total sales by value and volume went up significantly compared to a year ago is hard to explain."

The average weekly value of sales in November was £5.8bn, 2.9 per cent higher than the same time last year, the ONS found. Total sales volumes for the three months to November were 1.7 per cent higher than for the same period in 2007, but this was the lowest growth since March 2006 when it was 1.6 per cent.

The ONS defended its survey, comprising data supplied by about 5,000 businesses, including 900 of the largest retailers in Britain; the Government's data is based on a larger sample of retailers than the data from the retail consortium. The ONS said it was confident that its statistics were reliabile.

Yesterday, for the first time, the ONS released data on internet shopping, which continued to lift overall retail sales. Online sales soared to £220m in November and accounted for 3.8 per cent of total retail revenues, up from 2.8 per cent in June.

The latest IMRG Capgemini e-tail sales index found online spending surged by 16 per cent in November compared with the same time last year. Last month's sales were also up by 26 per cent on October, when the fallout from the banking crisis hit consumer confidence, according to IMRG Capgemini.

However, the reality for most high street retailers is grim as they battle one of the sharpest economic slowdowns since the Second World War.

Furthermore, retail rents for the first quarter are due on 25 December and Britain's largest landlords have put an army of bailiffs on standby to take appropriate action if tenants cannot pay, according to the trade magazine Retail Week. Insolvency practitioners are also waiting for the nod from retailer's banks to put a number of chains into administration.

Yesterday, Experian said that footfall on the high street on Monday and Tuesday was down by an average of 11.2 per cent, compared with last year.

Trade at some retailers is robust as they put expansion programmes into action. The value retailer Poundland is to open at least 35 stores next year, after opening 40 this year. Jim McCarthy, the chief executive, said: "We are committed to continuing our ambitious expansion plans even further next year."

Mr Robertson said: "While conditions remain tough, retailers have reacted with high-profile price cuts and promotions. This, together with the recent reductions in VAT and interest rates, has meant in the last few days shoppers have come out in force.

"Some retailers will now dare to breathe a sigh of relief that customers are simply delaying their Christmas spending, rather than cancelling it entirely."