New figures cast doubt over Christmas high street shopping sales

 

Discounts and promotions failed to entice shoppers during November as figures today cast more doubt over high street prospects this Christmas.

Sales volumes fell 0.4% from the previous month, according to the Office for National Statistics (ONS), with poor sales of computers, watches, jewellery and carpets. Stripping out fuel, the figures were even worse, down 0.7%.

The drop in sales, despite a large number of special offers from retailers desperate to drum up trade, was slightly bigger than the City had expected and brought to an end two months of growth.

The ONS said shoppers still spent 3.3% more than a year earlier as the impact of raw material inflation on shop prices continued to be felt.

British Retail Consortium said it was clear shoppers had approached the Christmas period with great caution, reining in their spending in November and leaving it late to start their Christmas shopping.

Director-general Stephen Robertson said: "The continuing high levels of pre-Christmas discounting and promotions are another symptom of weak demand.

"Retailers know they need to fight hard for every pound that's out there in the hope of attracting business which would otherwise go to their rivals."

Mr Roberton said his members were still hopeful that consumers will look to treat themselves and their families in the final days before Christmas.

Today's poor figures come in the week a Government-commissioned report by retail guru Mary Portas warned that the UK's high streets were under threat from online competition, with some town centres described as "dead".

She said it was too late to save every high street but warned that casualties will continue to increase unless action is taken to tackle the crisis.

The figures showed non-food retailers battled against their biggest monthly fall in sales since February, while food stores saw their largest fall for half a year.

This was despite strong internet demand and a recovery in clothes sales, which had been hit in recent months as the mild autumn weather prompted shoppers to resist buying winter clothes.

The retail sector has fallen victim to a far-reaching consumer spending squeeze, driven by high inflation, muted wage growth and weak confidence.

Major players including Mothercare, HMV and Carpetright have all suffered, with only a small number, such as Sports Direct, bucking the trend.

There are fears that some well known retailers could go under after Christmas as consumers rein back spending amid fears of a recession.

Samuel Tombs, of Capital Economics, said: "Today's official figures confirm that November was a bad month for retailers and will raise concerns that spending will be soft over the crucial festive period.

"What's more, the drop in sales volumes may have been greater had retailers not resorted to another month of discounting."

While it was possible that shoppers were putting off buying gifts until the last minute, he added that "a splurge by consumers in the final weeks before Christmas will only mean that retail spending in early 2012 is even weaker than currently seems likely".

PA

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