Retailers suffer from a Christmas hangover

Survey shows worst month for three years on the high street in a dire start to 2012

A painful, post-Christmas hangover hit the high street this month, as shoppers closed their wallets after a festive splurge, the CBI warned today.

Its latest distributive trades survey revealed the worst month for retailers in nearly three years during a dire start to 2012 when several names – including La Senza, Barratts and Peacocks – were forced into administration.

The retail gloom comes a day after official estimates showed a worse-than-feared 0.2 per cent slide for the spluttering UK economy in the last three months of 2011.

The consumer caution at the start of the current quarter will also be a huge concern for Chancellor George Osborne, who is staring down the barrel of a double-dip recession and facing renewed questions over his strategy to cut Britain's deficit.

The CBI's survey – covering the first two weeks of January – showed retailers in their most downbeat mood since March 2009 as a 22 per cent balance of respondents reported lower sales than a year ago.

Ian McCafferty, the CBI's chief economic adviser, said: "Shoppers have reined in spending across the board at the start of the new year after taking advantage of early discounting last month, which boosted pre-Christmas sales. Family budgets are under continuing pressure with inflation still high and wage increases modest.

"Consumers are still holding off particularly from buying big-ticket items like washing machines and fridges. Online and mail-order sales were the only areas that performed well in January, but growth was still down on last month," he added.

Official figures showed a 0.6 per cent rise in sales volumes during December, but retailers were heavily reliant on price-slashing to draw in shoppers.

Retailers will hope that the squeeze on household wallets will ease gradually this year as inflation falls back towards the Bank of England's 2 per cent target, helped by recent price cuts from the UK's "big six" energy suppliers.

Interest rates are also unlikely to budge from their 0.5 per cent record low for the next 18 months at least, staving off higher mortgage payments for millions of borrowers on variable rate deals.

But rising unemployment is unlikely to herald any significant boost for wages in 2012, while the independent Office for Budget Responsibility predicts anaemic 0.2 per cent growth in household spending – accounting for around 60 per cent of the overall economy – this year.

Deutsche Bank's chief UK economist George Buckley described the CBI survey as "disappointing".

"Lower inflation going forward and a resumption of the recovery in the second half should support sales, but in the meantime squeezed real incomes will make life difficult for retailers," he said.

Peacocks in play

Several private equity firms have exited the race to acquire Peacocks, the collapsed clothing retailer. Cinven, Permira and Sun European Partners, which acquired its stablemate, clothing chain Bonmarche, this week, are among those to drop out. But private equity firms such as KKR and the retail restructuring firm GA Europe are mulling bids for Peacocks ahead of Monday's deadline. The restructuring firm Hilco is providing advice on the operational side to KPMG, which is handling the sale of the discount fashion chain. All parties declined to comment.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea