British retailers enjoyed a modest recovery in takings last month as New Year resolutions boosted sales of fresh fruit and exercise equipment, industry figures have suggested.
But the British Retail Consortium’s latest snapshot of sales showed shops continued to rely on widespread discounting to lure in cash-strapped consumers. It said retail sales – stripping out the effect of new shop space – increased by an annual 0.2% , having fallen an annual 0.4% in the crucial Christmas month.
But the less volatile figures covering the latest three months showed sales were also up an annual 0.2%, the fastest underlying growth since the start of last summer.
Underlying sales growth quickened
BRC’s director general, Helen Dickinson, said: “Last year retailers had a bumper January so to see growth against such a tough comparison shows the industry to be in rude health. Customers were offered attractive bargains on winter ranges but it remains to be seen at what cost to the retailers’ margins.”
She added: “Shoppers were in the mood to buy products aimed at helping them lead a healthier lifestyle – from fruit and veg to exercise equipment, all these kinds of products have been selling strongly.”
The BRC’s report, compiled along with consultants KPMG, showed like-for-like food sales falling at the slowest annual pace for almost a year in the three months to January, down 1.8%. The report said non-food sales grew 1.8%, helped by the continuation of end-of-season sales into January.
David McCorquodale, head of retail at KPMG, also highlighted the pressure on retailers from continued discounting.
He said: “After a subdued December, retailers experienced a semi-revival in fortunes as shoppers took advantage of the bargains on offer in the January sales. These figures clearly demonstrate the difficult cycle that retailers are trapped in.
“Demand is now almost solely driven by discounts, with shoppers very reluctant to buy goods at full price in the hope that yet another sale could be just around the corner. This promotion-led environment risks becoming the new normal: retailers are struggling to persuade consumers to break the habit and go back to the traditional sales cycle.”
