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UK retailers hit by tough trading as figures fall flat

UK retailers endured a tough festive trading period as consumers kept a close eye on their spending and hunted for bargains, industry figures reveal today.

The figures, from the British Retail Consortium, show the total value of UK retail sales in December was up just 1.5% on the same month of last year.

This implies no growth in volumes, given inflation.

It also represents a deterioration from November, when the value of retail sales was up 1.8% year-on-year.

The BRC has calculated annual shop price inflation at 1.5% in November. This signals a broadly flat year-on-year picture in December in terms of sales volumes. Annual UK consumer prices index inflation stood at 2.7% in November.

David McCorquodale, head of accountancy firm and BRC survey sponsor KPMG's UK retail practice, said: "A flat end to a flat year is perhaps the best way to describe the Christmas trading for 2012."

He focused on the October to December quarter, noting that sales value over this period was also up just 1.5% year-on-year. However, while highlighting the weakness of the sales figures, he believed retailers had been better prepared this festive trading season in terms of holding less stock and declared things could have been worse.

Mr McCorquodale said: "Despite mild, albeit wet, weather for the whole of the last quarter and an extra full weekend immediately prior to Christmas, the final quarter saw total sales rise only 1.5% on the previous year."

He added: "Retailers this year were perhaps better prepared for a sluggish quarter and held less stock throughout. The stand-off between retailers and consumers looking for bargains and discounts continued throughout December and, while some retailers will report record Christmas sales, most will breathe a sigh of relief because it could have been much worse.

"Footfall rose in the last week of the year as consumers sought out some bargains, but the year's trading is made in the six weeks leading up to Christmas, not the six days after it."

Looking ahead, Mr McCorquodale said: "January will be a tough month for retailers as consumers face up to their credit card bills after Christmas and it's likely 2013 will bring more of the same challenges.

"While consumer confidence remains low, shoppers will tighten their belts and rein in their spending, making life difficult for the average UK retailer.

"There will be no boom and it's likely more than a few will go bust."

Online sales were strong in December, with the BRC believing the surging popularity of smartphones and tablet computers had made this method of shopping even more accessible.

The BRC said the value of online sales in December was up 17.8% on a year earlier. This was the fastest such growth in this category since December 2011, when online sales had been up 18.5% on a year earlier.

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