Growing internet sales boost retail sector

Internet shoppers spurred on the retail sector last month after figures today showed web business accounted for a record 10.5% of all sales.

The online growth meant overall monthly sales volumes rose by 0.3%, broadly in line with market expectations, as shoppers showed signs of bringing forward big-ticket purchases before VAT rises to 20% in January.

Average weekly online sales increased by 36.6% year-on-year to £660 million a week in November, growing more than 10 times faster than the rest of the retail market, according to the Office for National Statistics.

Despite the boost from online sales, the overall monthly growth rate in November was slower than the 0.7% increase the previous month.

But there was a return to annual growth, with sales in November 1.1% higher than a year ago, whereas in October sales were 0.1% down year-on-year.

The growth was led by sales of toys, clothes and footwear while sales of DIY products and furniture declined.

Vicky Redwood, senior UK economist at Capital Economics, said: "November's UK retail sales figures provide further evidence that consumer spending is ending the year on a relatively strong note.

"Admittedly, at least part of this strength probably reflects consumers bringing forward big-ticket spending ahead of the VAT rise.

"But for now, at least, consumer spending should prevent the overall economic recovery from slowing too sharply in the final quarter of the year."

The snowy weather that has gripped Britain in recent weeks and stopped many people getting to the shops happened too late in the month to have a significant effect on November's figures.

But there are fears the weather could affect December's trading after retailers, such as Wickes-owner Travis Perkins, reported that sales were disrupted.

British Retail Consortium director general Stephen Robertson said Christmas was delicately balanced for the retail sector.

"Total sales growth has been weak for eight months now and a third of retailers have told us they're expecting a worse Christmas than last year," he said.

"Add in the disruption caused to our high streets by the severe winter weather and it all makes for a nail-biting end to the year for retailers."

Howard Archer, chief economist at IHS Global Insight, said there will be more pain to come for retailers in 2011 after VAT rises and the Government's austerity cuts affect people's spending power.