A FAR FROM MERRY CHRISTMAS IN THE HIGH STREET

8th January 2008

Total Market

• UK retail sales rose only 0.3% on a like-for-like basis, compared with December 2006, when sales were up 2.5%. December’s growth was the weakest since the decline in March 2006 when sales were hit by Easter falling in April in 2006. It was the worst December figure since 2004.
• The three-month trend rate of growth fell to 0.8% from 1.8% in November for like-for-like sales, and to 2.8% from 3.8% for total sales, reflecting the continuing growth of retail space.

Kevin Hawkins, Director General, British Retail Consortium

“This result is somewhat worse than we expected and points to a very challenging first half for 2008. Given that the full effects of the Bank’s previous increases in interest rates have yet to be felt by many households, retailers and manufacturers alike need a rate cut now – preferably a full half-point.”

Helen Dickinson, Head of Retail, KPMG

"Sales did grow in December but, as the worst performance since March 2006, growth can only be described as weak. In the lead-up to Christmas there were huge daily swings as shoppers replaced even spending patterns with a smaller number of bargain-hunting 'big swoops'. Sector performance also varied. Clothing and footwear sales actually fell in December for a third consecutive month, while food and drink, and toiletries and cosmetics grew.

"This sets the scene for the new year ahead and like-for-like sales look set to move into negative territory as they did in 2005. This does not bode well for retailers struggling with rises in their cost bases of around 4%."

Food & Drink sector performance – by Joanne Denney-Finch, Chief Executive, IGD

“The leading grocery retailers began their Christmas campaigns early in 2007 and December was characterised by a continuing slow burn rather than by a dramatic surge in sales. Christmas food and drink sales were slightly stronger than 2006, though year-on-year growth was less than last year and value performance in some grocery categories will have been supported by price increases.

“Shoppers are keen to try new products and premium items, with Christmas providing a perfect opportunity for suppliers and retailers to display their quality credentials. This was done to great effect. Encouragingly non-groceries sold well in a period when the grocery trade competes vigorously with other sectors for the festive pound.”

Non - Food

• Clothing and footwear sales were down on a year ago for a third consecutive month. Homewares and furniture worsened, remaining lower than a year ago, often despite aggressive discounting. Health and beauty slowed sharply but remained up on a year ago.
• Consumer confidence has fallen further, despite December’s cut in interest rates. The slowing housing market and increasing demands on households’ finances have hit big-ticket and discretionary purchases.

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