By Marcus Leach
Official retail figures reported today (Friday) by the Office for National Statistics (ONS) confirm that the festive season gave the sector a boost during December after a tough 2011.
The ONS statistics reflect the findings of the British Retail Consortium's (BRC's) own Retail Sales Monitor, which showed a late rush to the shops at the end of the month driven by extensive discounting. Sales were made at the expense of margins and a flurry of retail failures in the first few weeks of 2012 reflect the extremely difficult underlying trading conditions.
These December figures are also being compared against a particularly weak, snow-hit month in 2010 and are flattered by the impact of last January's VAT rise.
British Retail Consortium Public Affairs Director, Jane Bevis, said: "As our own figures showed, December did provide a small boost for the retail sector. After a difficult year some shoppers relaxed their tight hold on their finances and allowed themselves to splash out on gifts and festive food and drink, aided by deep discounting. Others had cut back on spending in previous months and saved up for the season.
"However these figures are being compared with a poor, snow-hit December the previous year and the fundamental conditions which are making business difficult for retailers haven't changed. Underlying factors including low consumer confidence and falls in real disposable income mean shoppers remain reluctant to spend and are only encouraged by significant discounting. Retailers are competing hard on price and their margins are feeling the effects. For some, these difficult trading conditions have led to business failure.
"The year is likely to start with customers tightening their belts once more despite some relief in the form of falling inflation and an easing of energy bills. Retailers will be braced for a couple of slow months and the danger is that the eye-watering business rates rise of 5.6 per cent, due to come into effect in April, will push more high street businesses over the edge. Retailers have responded to the squeeze on consumer finances by cutting prices in store at the expense of their own margins. We need to see the Government doing more to reduce the costs it controls."
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