More bad news for the UK highstreet in the form of the British Retail Consortium’s latest trade figures. The industry body reports its first-ever consecutive two-month fall in sales in November.
According to the BRC:UK retail sales values fell 2.6% on a like-for-like basis, from November 2007, when they had risen 1.2%. Total sales were lower than a year ago, as in October. This was the first time since the survey began in January 1995 that sales declined for two consecutive months.
• Food and drink was the only sector to show sales up on a year ago. Despite extensive heavy discounting, clothing and footwear, furniture and big-ticket homewares fell further below year-earlier levels.
• Discounts and promotions continued but often failed to tempt customers unless they perceived value or really needed the product.
• Non-food non-store sales in November were 9.5% higher than a year
Meanwhile, more highstreet names are coming under pressure, especially in the home furnishing arena. Tuesday saw Land of Leather end talks with possible buyers on ‘insufficient value for shareholders’ despite three profit warnings in the last year. Shares in the furnishing group fell 22 per cent in London trading on the news. That’s in the context of a 99 per cent drop this year already.
The view from Howard Archer, chief UK economist at IHS Global Insight: that measures like VAT reductions are unlikely to help. As he explainsThe problems facing consumers run deep, and they can only be partly countered by the Value Added Tax reduction from 17.5% to 15.0% that came into effect at the beginning of December, the sharp cutting of interest rates by the Bank of England and the increasingly desperate discounting and sales promotions being seen on the high street. Indeed, a survey by Experian indicates that shopper numbers declined by 1.7% this past weekend compared with the corresponding weekend in 2007.
He warns that even if flash sales, sharp discounting and sales promotions do succeed in lifting consumer spending to a limited extent in December , the effect will likely only be temporary. More profit warnings in store then for the UK retail sector.