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Shops discount to entice buyers

HIGH Street retailers faced challenging trading conditions in the first two weeks of December when sales fell 2.6% by value compared with the same period last year, a survey found.

BUDGET: Fewer shoppers spent money in stores in the first fortnight in December than in the same period last year.Picture:  Colin Mearns
BUDGET: Fewer shoppers spent money in stores in the first fortnight in December than in the same period last year.Picture: Colin Mearns

Accountancy firm BDO said the results of its latest High Street sales tracker research suggested stores were having to rely on discounting to persuade shoppers to spend despite clear signs the economy is recovering.

Neil Craig, Scottish partner at BDO, said the fall in sales reflected the pressure on consumer spending that has resulted from a combination of inflation and sluggish growth in wages.

"The vast majority of shoppers have seen their real wages fall over the past 12 months and simply don't have the money to spend this Christmas," he said.

The fall in overall sales was driven by a 4.5% drop in spending on fashion goods, although there have been plenty of sales on in shops.

Consumers may have been shifting at least some of their spending online.

Non-store sales increased by 29.1% annually in the two weeks to December 15.

Sales of homewares increased by 11.4% on low levels recorded in the same period last year.

Conditions may have improved during the fortnight.

While total sales shrank by 4.1% during the first week of the month, they fell by only 1.1% the following week.

Martin Beck, at Capital Economics, noted that the results of the latest CBI Distributive Trades survey, published on Wednesday, lent weight to predictions December may see a pick-up in sales. Of retailers surveyed by the employers organisation between November 27 and December 11, 48% said sales volumes were up on a year earlier and only 14% reported they were lower.

But Mr Beck noted official figures released yesterday indicated consumers remained in a cautious mood in November.

The Office For National Statistics said total retail sales volumes increased by only 0.3% in November on the preceding month, in line with City expectations.

The increase only partly reversed the fall in sales in October, revised up to 0.9% from 0.7%.

Howard Archer, UK economist at IHS Global Insight, said consumers may have taken a breather before Christmas after spending strongly through the third quarter.

Retail sales in the three months to November were flat compared to the quarter to August.

The volume of food sales increased by 0.2% in November, on October. Non-food sales rose by 0.5%. Sales of textiles, clothing and footwear, and household goods increased by 3.8% and 0.9% respectively.

Sales by non-store retail and repair operations, including online outlets, rose by 0.4%.

Sales at non-specialised outlets such as department stores fell by 3.1%.

Research by Creditsafe, a business intelligence firm, found 75% of property management firms had seen retailers attempting to renegotiate the terms of leases with landlords in the last year.

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