Olympics casts cloud over shops and UK economy

Britain had its share of winners this summer but the high street was not among them

The Olympics may have lifted the country but not, it seems, the crucial retail sector. Sales in Britain's shops, excluding petrol, fell 0.3 per cent in August, the Office for National Statistics (ONS) has said. This was roughly in line with most analysts' forecasts, but nevertheless is yet another sign of Britain's current economic woes.

Big-ticket items seem to have felt the brunt of the Olympics as shoppers stayed at home, with household goods shop sales falling 2.7 per cent on the month. Department stores also suffered a hefty sales drop of 0.7 per cent. But this was nothing compared to the fall in online retail sales of 6.7 per cent, with people choosing to watch the Olympics on television rather than surf the net and make impulse buys.

Howard Archer, the chief economist at IHS Global Insight, said: "It is evident that online sales in particular were hit appreciably as people watched the Games rather than shop. It is also likely that shopping footfall suffered to some extent overall from the Olympics."

But there was some cheer for retailers. The Olympic spirit seems to have prompted Britons to hit the sports retailers. Data from the card payment firm Visa showed spending at sport stores up more than 20 per cent year on year during August.

Suspension of the Sunday trading laws during the Olympics, combined with a greater proportion of people eating at home to catch the Games action on TV, was a boon for supermarkets. Food sales were up 1 per cent during the month, with larger store food sales 2 per cent up, although smaller stores were 4.5 per cent down, according to the ONS.

But more than the Olympics was at play in August, as it seems retailers reversed previous price cuts, and as a result suffered at the tills.

Nida Ali, the economic adviser to the Ernst & Young Item Club, said: "There may well be an Olympics effect at play, with consumers temporarily distracted by events in east London. But it was also noticeable that the heavy discounting, which had supported sales volumes in previous few months, gave way to price rises in August."

News of a poor month on the high street will add to gloom surrounding the prospects of the economy bouncing back from recession in the third quarter. And it comes on the back of poor purchasing management data for the consumer sector last week.

However, it is not all bad news, with the CBI's monthly industrial trends survey showing that the total order book balance rose this month to minus eight from minus 21 in August, above expectations of a reading of minus 15. Exports are also improving. The order book balance rose to minus 10 from minus 17. Anna Leach, the CBI's head of economic analysis, said: "Domestic and overseas demand have improved in this survey following last month's falls, providing a foundation for somewhat better output growth expectations."

Nevertheless, the Institute of Chartered Accountants in England and Wales (ICAEW) predicted in its first annual forecast of the UK economy that it will contract by 0.5 per cent in 2012. What is more, the ICAEW says recovery will be slow in 2013, with it forecasting growth of just 0.9 per cent.

Ocado blames Games and Jubilee weekend for slowdown in sales growth

The online grocer Ocado has blamed the Olympics and Jubilee for a slowdown in its sales growth, leading to renewed questions about its long-term prospects.

The internet specialist, which largely delivers Waitrose groceries, suggested it had lost some sales growth due to unexpected trading patterns during the Olympics in the last quarter However, it said the impact of the Games was less clear than the up to 1.5 per cent of revenues it lost around the long Jubilee weekend.

Ocado's chief executive, Tim Steiner, said: "With the Olympics, one week we were up more than expected and one week we were down." He added: "The market is very competitive and there has been unprecedented vouchering activity. We have not stepped up the couponing activity in order to maintain margin and profitability."

Ocado delivered sales growth of 9.9 per cent to £162.6m over the 12 weeks to 5 August, which was lower than City expectations and behind a rise of 12 per cent in the first half.

While Ocado said it was "targeting an increase in sales growth" in its fourth quarter, some City analysts described its performance as "disappointing" and cut forecasts for underlying profits for this financial year by £2m to £35m. Shares in Ocado fell by 2.8p to 64.4p yesterday, leaving them nearly two-thirds lower than its float price of 180p in July 2010.

James Thompson

VIDEO
Life & Style
Father and son: Michael Williams with son Edmund
lifeAs his son’s bar mitzvah approaches, CofE-raised Michael Williams describes the unexpected joys he’s experienced in learning about his family’s other faith
Arts & Entertainment
Ian Anderson, the leader of British rock band Jethro Tull, (right) and British guitar player Martin Barre (left) perform on stage
musicJethro Tull frontman leads ‘prog rock’ revival
Sport
Gareth Bale dribbled from inside his own half and finished calmly late in the final to hand Real a 2-1 win at the Mestalla in Valencia
sport
Arts & Entertainment
Who laughs lass: Jenny Collier on stage
comedy... writes Jenny Collier, the comedian whose recent show was cancelled because there were 'too many women' on the bill
News
House proud: keeping up with the Joneses now extends to children's playhouses
newsLuxury playhouses now on the market for as much as £800
News
news
Life & Style
Stir it up: the writer gets a lichen masterclass from executive chef Vivek Singh of the Cinnamon restaurants
food + drinkLichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines
Extras
indybest
Arts & Entertainment
Ken Loach (left) and Mike Leigh who will be going head to head for one of cinema's most coveted prizes at this year's Cannes Film Festival
filmKen Loach and Mike Leigh to fight it out for the Palme d'Or
News
The academic, Annamaria Testa, has set out on her website a list of 300 English words that she says Italians ought to stop using
newsAcademic speaks out against 'Italianglo' - the use of English words in Italian language
Life & Style
tech
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

1st Line Helpdesk Engineer Apprentice

£150.00 per week: QA Apprenticeships: This company has been providing on site ...

Telesales & Sales Support Apprentice

£221.25 per week: QA Apprenticeships: This company is a well established Inter...

Client Relationship Manager - SQL, Python

£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...

**Financial Services Tax**

£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...

Day In a Page

How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

Ricky Gervais: 'People are waiting for me to fail'

As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

Mad Men returns for a final fling

The suits are still sharp, but Don Draper has lost his edge
Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

Google finds a lift into space will never get off the ground

Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit
Westminster is awash with tales of young men being sexually harassed - but it's far from being just a problem in politics

Is sexual harassment a fact of gay life?

Westminster is awash with tales of young men being sexually harassed - but it's far from being just a problem in politics
Moshi Monster creator Michael Acton Smith: The man behind a British success story

Moshi Monster creator Michael Acton Smith

Acton Smith launched a world of virtual creatures who took the real world by storm
Kim Jong-un's haircut: The Independent heads to Ealing to try out the dictator's do

Our journalist tries out Kim Jong-un's haircut

The North Korean embassy in London complained when M&M Hair Academy used Kim Jong-un's image in the window. Curious, Guy Pewsey heads to the hair salon and surrenders to the clippers