Retail sales fall again as tough conditions look set to continue

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The Independent Online

Retail sales fell for the second consecutive month in April, putting consumer spending at its rockiest since the spring of 2005, according to figures published yesterday.

Like-for-like sales dropped by 1.5 per cent last, following a 1.6 per cent fall in March, taking the overall decrease for the three-month period to 0.6 per cent, according to the British Retail Consortium (BRC). Food sales are holding out, even picking up compared with March. But clothing – the next largest sector – is showing double digit decline, although the figures do not account for the Sunday or Monday of the warm bank holiday weekend.

But even the sunny weather is unlikely to dispel the gloom on the high street, said Stephen Robertson, the director general of the BRC. "With the economic fundamentals remaining weak, there seems no reason for these tough trading conditions to improve soon," Mr Robertson said. "With higher fuel and utility bills eating away at people's spare cash, they are concentrating on essentials like food, and despite heavy discounting, clothing and footwear are at their weakest for at least eight years and more expensive housing-related goods continue to struggle."

The numbers will not come as a surprise to the retail sector. The fashion chain Next reported like-for-like sales down nearly nine per cent last week, though boosted by the sunshine. And warnings were issued across the sector this year, including at furniture shops such as Land of Leather, DIY outlets such as Homebase and the electronics giant DSG International.

So far the food retailers are weathering the storm, with Tesco posting record pre-tax profits and unveiling plans to hire another 30,000 staff globally, despite rising commodity prices.

The divergence between the food and non-food sectors is likely to continue. "Food retailers are successfully passing on a large proportion of rising farm gate prices but consumers are still buying because the food bill is the last to go," Helen Dickinson, the head of retail at KPMG, said. "And if people have less money to spend, they are likely to go out less, which will mean buying more food."

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