Signs of stabilisation on the high street after resilient retail sales

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The Independent Online

Retailers delivered a surprise rise in sales in September after four months of falls, indicating that spending on the high street is stabilising ahead of the Christmas trading period.

In a further positive sign, retailers expect the better-than-expected sales to remain unchanged in October, according to the CBI Distributive Trades Survey. The volume of orders placed with suppliers in September also fell at the slowest rate since February 2008.

While 36 per cent of retailers said that sales volumes fell in the year to September, 39 per cent said they rose. The net balance of 3 per cent equalled this year's previous best figures in April.

Andy Clarke, the chief operating officer of Asda, said: "After such a difficult summer, it is encouraging to see signs that conditions in the retail sector are stabilising. But, with unemployment rising, wage growth low, and consumers building up their savings, spending is likely to remain subdued for some time."

He also said that shoppers may bring forward spending ahead of VAT returning to 17.5 per cent on 1 January.

The September uplift was driven by a strong performance by the grocers, and footwear and leather retailers.

While all other retail sectors delivered falling sales, the decline at clothing, and furniture and carpet retailers was the lowest so far this year. The worst performers were retailers of durable household goods, with a net balance of 53 per cent posting declining sales. After 11 months of falling sales, wholesalers delivered flat sales in September, with sales down at a net balance of just 1 per cent, said the CBI survey conducted between 27 August and 16 September.

Today, Sir Stuart Rose, the executive chairman of Marks & Spencer, is likely to reinforce downbeat comments from high-street rivals about the outlook for consumer spending in 2010, alongside the retail giant's second-quarter results. Robin Knight, a partner at the retail restructuring specialist Zolfo Cooper, said: "The golden [final] quarter has the ability to make or break." He added: "The first quarter of next year will see further distress in the retail sector. I think there will be a few [retailers] coming down with the Christmas decorations."