Sales frozen out on high street as cold snap bites

Feb 9 2010 by Peter McCusker, The Journal

THE high street suffered its worst January in at least 15 years after snow and economic woes hurt sales, the British Retail Consortium said yesterday.

The “awful“ start to 2010 followed the strongest December for eight years and dampened hopes of a strong retail recovery.

Total UK sales rose 1.2% on a year earlier in the month, the lowest-ever reading for the month since the BRC’s Retail Sales Monitor began in 1995.

Same-store sales values fell 0.7% in January compared to the same period last year, which was the worst figure for 14 years.

The figures are much lower than economist expectations of total sales growth of 3.3% and like-for-like increases of 0.5%. They are also steeply down from the respective rises of 6% and 4.2% seen in December.

Severe weather kept shoppers off the high street at the beginning of the month, while the impact of a higher VAT rate and economic uncertainty also saw consumers focus on essentials at the expense of other items.

Chilly weather provided a boost to food sales at the start of the month and consumers stocked up on frozen and tinned food amid fears over the impact of heavy snowfall.

Pies, pizzas and puddings were also on the menu as customers sought comfort from the cold.

Internet sales were higher amid the snow disruption, with non-food sales including mail order and telephone orders up 14.6% in January.

But the heavy snowfall also stopped consumers hitting the shops and discretionary items were scratched off people’s shopping lists.

Clothing sales were lower than in December and the cold spell saw customers focusing on outerwear, woollens and ski-wear.

Boots of all kinds were in vogue during the colder weather, while in an otherwise depressed homewares market, electric blankets and bedding saw gains.

The effects of recession were still being felt in customers’ wallets as sales and discounts drove purchases in areas such as department stores and home electronics. DIY was among the worst performing sectors in the cold snap as householders put off outdoor chores until milder weather returned. Sales of shovels, salt and grit were “excellent“, however.

Furniture also under-performed in the month, with sales sharply below already weak levels the year before.

The declines were the worst since last March as consumers concentrated on essentials, although clearance discounts on fitted kitchens and upholstery did provide a rare uplift.

Stephen Robertson, BRC director-general, said: “An awful start to the year and in stark contrast to an upbeat December. This is the worst January sales growth in the 15 years we’ve been running the survey.”

Helen Dickinson, head of retail at KPMG, which co-authors the report, said January’s results were partially flattered by higher shop prices because of the VAT hike.

“The underlying trend is difficult to read but there is no doubt that the strong sales we saw in December 2009 are not indicative of the trend for the rest of this year,” she added.