21 Apr 2011

Retailers still facing challenges as sales stay low

Retail sales rose by a small 0.2 per cent in March, but the British Retail Consortium tells Chanel 4 News: “People are feeling the pinch”

Woman shopping (R)

Retail sales rose by a small but unexpected 0.2 per cent in March after a 1 per cent drop in February. The areas that saw a drop in sales were clothes, shoes and household goods, while a jump in spending on food helped lift the figures.

There were mixed reactions to the figures, with some analysts claiming it represents an improvement in the fortunes of Britain’s retail industry. But Sarah Cordey, spokeswoman at the British Retail Consortium, told Channel 4 News that the small rise doesn’t change the underlying situation: “We believe strongly that whatever the different number say, the figures show a contraction in the retail sector and a growing reluctance by consumers to spend.

“They do still illustrate a difficult time for the sector and they reflect what we are hearing – that people are feeling the pinch.”

Small store gains

One clear trend showed supermarket sales falling while smaller shops picked up the trade. Food sales rose 0.7 per cent on a monthly basis but were one per cent down on the previous year. Small stores, employing less than 100 people saw a 12.3 per cent increase in sales, while supermarkets saw a drop of 3.1 per cent.

Tesco said this week that it failed to meet its UK profit expectations for the last year and expected conditions to remain challenging.

“Fundamentally weak conditions”

Sarah Cordey said that there are some thoughts on why this is happening: “With the difficult weather over Christmas, people were shopping on foot locally and fuel prices being high could be leading to people doing more shopping by foot.”

She said that the hot weather may lift sales, but the main trend is still disappointing: “There is reason for optimism that the good weather and the bank holiday should provide a boost for April. But these effects are all temporary and they don’t change an underlying caution, that fundamentally weak conditions are keeping consumer confidence low.”

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