Retail Sales Soar During Christmas Rush

UK retail sales were boosted by a pre-Christmas rush.

Sales values were 2.2% higher on a like-for-like basis from December 2010, when sales had fallen 0.3%, hit by snow.

On a total basis, sales were up 4.1%, against a 1.5% increase in December 2010. On both measures and excluding Easter distortions, sales performance was the best since January.

Food sales growth picked up strongly and non-food also improved, but with sales often promotion-led. Clothing and footwear showed good gains on last December's weak sales. Homewares improved but big-ticket items and furniture sales remained down on a year ago, hit by consumer caution.

Non-food non-store (internet, mail-order and phone) sales growth picked up sharply from November's low. Sales were 18.5% up on a year ago, double November's gain but similar to the 18.0% in December 2010.

Stephen Robertson, Director General, British Retail Consortium, said: "A better than hoped-for December closed a relentlessly tough year for retailers, but these figures hinged on a dazzling last pre-Christmas week and were boosted by some major one-off factors. We're not witnessing any fundamental change in customers' circumstances.

"The comparison is with severe snow disruption a year ago. Discounting was deeper and started earlier and the vital Saturday Christmas-Eve added another big trading day to the final run-up. Post-Christmas offers brought large numbers of shoppers out but that was generally a short-lived hunt for bargains. With discounting driving sales at the expense of margins the key question for retailers is about earnings from those sales.

"A solid December result hasn't rescued a pretty miserable year. Whole-year figures show minimal growth in 2011. For many customers, economic reality has bitten again since the New Year and, with consumer confidence returning to levels last seen during the recession, 2012 is expected to be an equally challenging year."

Helen Dickinson, Head of Retail, KPMG, commented: "December's figures saw retailers achieve a 2.2 per cent increase in like-for-like sales, albeit against a background of heavy discounting and long opening hours. The month's figures saw the strongest growth in food sales of the year as people spent on food for the big day. Clothing and footwear also had a spectacular month. Deals helped consumers finally upgrade winter wardrobes as winter commenced in earnest.

"Whilst these results must be viewed in a positive light, it must also be noted that they have come at the end of a year which witnessed declines in most non-food sectors and are against December 2010's weak results, which saw sales badly affected by poor weather. Sadly no-one expects this level of demand to be indicative of the year ahead."

(GK)