Late but welcome Christmas Present for Retailers

The British Retail Consortium on the 10th January announced that retailers had announced a late but welcome Christmas Present with retail sales in the UK during December up by 2.6% on a like-for-like basis from December 2004 when sales fell 0.4%.  The increase in December was the largest since the 3.7% gain in May 2004 and the best since December 2001.

Like-for-like sales in December grew to 0.2% from –0.1% in November and to 4.1% from 3.8% for total sales.  In 2005 like-for-like sales averaged a 0.4% fall against a 1.7% gain in 2004.

The week before Christmas and the first two days of the post Christmas Sales were strong but sales then dropped back markedly.  Shoppers are remaining very value-conscious and have been taking advantage of the widespread promotions and sales discounts.  With sales been driven heavily by promotions, the underlying trade for major purchases is still tough.

Director General of the BRC, Kevin Hawkins said, “These are significantly better results than most forecasters were expecting, although the BRC sales figures for October and November indicated a slight improvement in consumer spending.  Underlying conditions, however, are still very tough and the first quarter of 2006 looks challenging, despite being up against weak comparatives in 2004.”

Helen Dickson, Head of Retail of KPMG commented, “ The December results are the best monthly set of figures since May 2004.  The poor expectations in the lead up to Christmas released retailers from the burden of expectation which badly blighted Christmas 2004.  This meant that retailers’ plans and strategies in the run-up to Christmas 2005 were adjusted accordingly.  For example, more of the discounting activity was targeted promotions on specific lines to drive footfall rather than blanket sales to shift surplus stock.

Also the timing of Christmas contributed to the improving trading performance.  More shops opened on Boxing Day this year, as opposed to last year when it fell on a Sunday.  And with Christmas Eve falling on a Saturday, there was an extra trading day in Christmas week.”