Retail monitor
Monday, 21 Apr 2008 00:01
High street sales hit by bad weather and weak economic climate
We take a look at the most recent retail indicators to let you know the current state of Britain's high streets.
Easter fell early this year, which should have given retailers a real sales boost. However, the credit crunch, poor weather and the changes to school holiday dates, gave shoppers a reason to stay away.
Retailers have posted lower sales for the last quarter and have blamed the economic climate for declining revenues. Footfall is lower, while costs edge ever higher. Debenhams and Woolworths have both reported fewer sales and slimmer margins as a result of discounting over the period, while Ethel Austin has gone into administration.
Most retailers expect conditions to remain the same over the short term, as consumers tighten their belts amid higher household bills and falling property values.
In March the high street suffered from lower footfall.
The British Retail Consortium (BRC) reported disappointing figures for March, despite an early Easter, as customers stayed away from the shops in droves.
A cut in the interest rate last week may boost spending, but banks may be reluctant to pass any cuts onto customers as the Libor – the rate at which banks lend to each other – still remains high, at around six per cent.
BRC/KPMG retail sales index
March: UK retail sales fell 1.6 per cent on like-for-like basis. Comparative increase in 2007 was 3.9 per cent.
BRC director general, Stephen Robertson, said: "This is the first year-on-year fall in like-for-like sales for two years and the worst result for nearly three years.
"Here is the strongest evidence yet customers are making serious economies and are increasingly concerned about the future."
Furniture and DIY sales were down, despite discounting on the high street, as a weak property market had a knock-on effect.
CBI retail survey
February: Balance of one per cent of firms achieved a rise in year-on-year sales volumes. Up from last month's minus three per cent.
The distributive sales survey revealed a balance of one per cent of firms achieved a rise in year-on-year sales volumes – up from last month's minus three per cent.
Howard Archer, chief UK economist with Global Insight, said: "The survey does little to change our view that consumer spending will be softer over the coming months after a surprisingly robust start to the year."
ONS retail sales
January: Sales volumes up one per cent in month to February.
Total sales volume increased by one per cent between January and February. Sales volume for predominantly food stores increased by 1.6 per cent, the largest increase for this sector since June 2006 (1.9 per cent).
Nationwide consumer confidence index
February: Index falls a point to 77 in March. Barometer drop confirms trend of declining consumer confidence.
Fionnuala Earley, Nationwide's chief economist, said: "The downturn in consumer confidence over the last six months is not surprising given developments in the financial markets and a weakening housing market.
"The effect of recent interest rate cuts has yet to trickle through to people's pockets, particularly as food and energy costs are still high."
GfK NOP consumer confidence index
February: Monthly index drops two points to minus 19. Index at the lowest level since February 1993.
GfK NOP's Rachael Joy said fears about a UK recession were now widespread.
"Consumer confidence again continues its downward trend for the seventh month in a row. With news reports of possible recession in America, fears of recession in the UK, and stock market fluctuations, the consumer’s gloom continues to grow."