With the freezing December weather leading many people to leave their Christmas shopping to the last minute, most retailers were left to count the cost. Chris Knox looks at the winners and losers on the high street.
WITH retailers experiencing one of the worst Christmas and new year trading periods in living memory in 2008, a bounce-back in consumer confidence in 2009 provided a measure of hope that the high street was on the road to recovery.
Christmas 2009 saw a temporary reduction in VAT from 17.5% to 15% which tempted more people to spend their cash in the shops, with some of the biggest winners including HMV and JD Sports.
Although firms were braced for a nervous trading period this time round, with shoppers conscious of the cuts in the public sector, there was hope that the impending increase in VAT to 20% would help to create a last-minute rush among consumers.
However, one element that is rather more difficult to predict is the British weather, and it was the heavy snowfall in December that dictated shopping patterns in the run-up to Christmas, with many shoppers waiting until the week before the big day to brave the high street.
Figures from the British Retail Consortium (BRC) show that while like- for-like sales were up 1.5% in December, retail values were down by 0.3%.
The gloomy picture is backed up by a report from the Officer of National Statistics (ONS), which shows that food store sales decreased by 3.4% – mainly due to the sharp rise in inflation.
The UK’s big four – Tesco, Sainsbury’s, Asda and Morrisons – have now rolled out rock-bottom deals on staple items as they look to provide a quick fix to a torrid Christmas.
Tesco reported its worst Christmas since becoming Britain’s biggest supermarket chain, while both Asda and Morrisons experienced small drops in market share of 0.1%.
The BRC is now calling on the Government to ignore calls for an interest rate rise, with many consumers already struggling with the VAT increase.
BRC director general Stephen Robertson said: “The unusually early winter weather compounded the effect of economic worries to make a difficult Christmas worse.
“The Bank of England must resist calls to increase interest rates while economic recovery remains so fragile. These figures show the private sector still needs support. Hard-pressed families are already under pressure from higher VAT while National Insurance goes up for many in April.
“Concerns about job security and renewed weakness in the housing market have knocked consumer confidence again.
“Holding interest rates and keeping the March Budget free of new burdens are key to enabling retailers to continue their vital contribution to job creation and growth.”
