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Discounting lifts spending on high street

HEAVY discounting in the January sales has helped to convince consumers to keep spending on the high street and pushed the value of UK retail sales up by 3.9% on a like-for-like basis, according to industry research published today.

BARGAIN: Retail sales this year have seen the strongest growth since March 2010. Picture: Colin Mearns
BARGAIN: Retail sales this year have seen the strongest growth since March 2010. Picture: Colin Mearns

The British Retail Consortium's latest sales monitor, compiled by accountancy firm KPMG, found total sales last month were up 5.4% year-on-year.

That was ahead of the 3% rise in January 2013 and means the start of this year had the strongest growth since March 2010.

Sales of furniture were a big contributor to the figures in the first month of 2014 as that category saw its best growth since April 2006.

However other non-food items, which include electrical, leisure goods and stationery, was the biggest overall factor in the result.

Tablet computers, televisions, cameras, games consoles and kitchen appliances were highlighted as being popular while book sales were said to have been the best in 18 months.

The continuing shift towards online shopping was shown by the 19.2% rise in non-food products bought over the internet, the strongest since January 2009.

On a three-month measure, covering November to January, average total growth came in at 3.2%, which is slightly ahead of the 12-month trend of 3%.

Non-food sales in that period were up by 5.1% while food grew by just 0.8%.

Scottish retail figures for January will be released later this month with retailers here hoping the 1.1% fall in value seen in December is not repeated.

Helen Dickinson, director of the BRC, said: "Customers responded enthusiastically to a range of sales and promotions on non-food items this January. Retailers succeeded in tempting shoppers in with promotions, they also saw strong demand across new ranges, helped by improvements in consumer confidence. This was not the case in food which in contrast saw very low levels of growth in the last quarter.

"January's figures set 2014 off to a good start; however comparisons are against soft non-food sales in January 2013, which will not be the case in February.

"Given the underlying conditions, it remains to be seen how the trend for the rest of the year will pan out."

Another factor affecting food sales across the UK was the popularity of the dry January which hit sales of alcoholic beverages.

The BRC research also suggests consumers are starting to make more regular trips to local convenience shops and discounters instead of a traditional weekly shop at a supermarket.

Footwear and clothing sales were described as strong although the BRC pointed out January 2013 had been affected by heavy snow keeping people away from the shops.

David McCorquodale, head of retail at KPMG, said: "These figures mark a strong start to the year for retailers. Most will take much from the positives and see genuine light at the end of the tunnel. However, behind the scenes some have had to discount heavily to secure these sales and will now be counting the cost of this strategy. Others have genuinely beaten expectations."

Mr McCorquodale suggested the "wet and windy" weather had proved far less disruptive than the snows of a year ago.

He added: "A strong performance in furniture, flooring and home accessories hints that the recovery in house prices is having a positive knock on effect. The early weeks of the month reflected strong growth in clothing and other non-food, hinting that post-Christmas sales campaigns had boosted the top line: only time will tell at what cost to the bottom line."

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