Shops report their best sales in four years thanks to early Easter

Grocers and non-food chains step up promotions to lure cautious consumers

The early Easter helped shopkeepers to enjoy their strongest monthly sales for nearly four years in March, the British Retail Consortium (BRC) reported yesterday.

Supermarkets, in particular, received a boost from Easter shoppers, despite the sector seeing the fiercest promotional activity since 2002, according to the March sales monitor compiled by the BRC and KPMG. The March report included the first three days of April, including Good Friday and Easter Saturday. Special events and promotions also helped house textiles, furniture and floor covering chains to improve their performances last month, but clothing and footwear shops suffered a slowdown in sales.

Total retail sales surged by 6.6 per cent in March, the best figure since April 2006, the BRC said. But the data were flattered by anaemic growth in the same month last year and the outlook for the sector remains uncertain. Stephen Robertson, the BRC director-general, said the sales growth "would have been only half as good without the distorting effect of Easter".

Underlying sales at stores open for more than a year rose by 4.4 per cent in March, which was the strongest data since April 2009, which also received a boost from Easter.

Food sales "picked up strongly" towards the end of the month, the BRC said, with the grocers enjoying buoyant sales of traditional Easter goods such as confectionery, gift foods, roasting joints and fresh fish. However, they had ratcheted up competition on prices.

Mr Robertson said: "In food and drink, this was the most intense March for eight years for promotional activity. Non-food is also a competitive battleground as retailers fight it out to entice customers being put off spending by pre-election uncertainty."

Among non-food retailers, furniture and floor covering chains saw their strongest trading since September 2009, although they benefited from comparisons with a "very sharp drop" in March of that year. Sales of fitted kitchens and bathrooms were lifted by special discount events and Easter promotions. The worst performers in the sector were women's clothing and footwear stores, as the prolonged cold snap led to a "mixed start" to sales of spring and summer ranges.

Clothing sales fell last month after a robust February, when shoppers came out in force following the snowfalls in January. Total footwear sales fell back in March, registering their weakest growth since September. Sales of women's shoes dropped below the level seen last year.

Industry experts are warning that the outlook for the high street remains uncertain as consumers battle rising fuel prices, lacklustre wage inflation and stubbornly high unemployment, as well as the prospect of hefty cuts in the public sector after the general election.

Barry Knight, the head of retail at the accountant Smith & Williamson, said: "Everyone in Government and the business world is fooling themselves about how tough conditions might get. I don't think there is enough contingency planning going on about the retail sector as a whole.

"The price war among the commodity-based chains, such as DIY and food retailers, seems to be intensifying rather than abating."

Retail administrations: Sharp fall in first quarter

The number of retailers collapsing into administration slowed significantly to its lowest level for four years in the first three months of this year.

The accountancy firm Deloitte said that just 44 fell into administration in the first quarter of 2010, compared to 124 in the same period last year.

Lee Manning, the reorganisations services partner at Deloitte, said: "The first quarter of 2009 saw exceptionally high levels of retail administrations and so it is not surprising to see a drop this time around."

The reduction has partly been driven by increasing acceptance of company voluntary arrangements, an insolvency procedure, and proactive measures to manage cash flow, as well as ailing chains doing debt-for-equity swaps. But Ian Geddes, the UK head of retail at Deloitte, said: "Growth will be hard to come by and further retail failures seem inevitable."