High street sales slump during May

9 June 2009

Sales on the high street slumped in May following the Easter boost seen in the previous month.

The warm weather and two Bank Holidays during May failed to translate into higher sales, according to the latest figures from the British Retail Consortium (BRC). Total UK retail sale values fell by 0.8% during the month, with sales of food slowing and big-ticket homeware and furniture refusing to budge.

Seasonal clothing and outdoor products, including gardening equipment and barbecue food and drink, performed a little better but failed to rescue the high street from the continuing impact of the recession. Away from the high street, however, non-food sales via the internet and mail-order jumped 7.6%.
Stephen Robertson, director general of the BRC, says: "Sun and bank holidays don't a recovery make. The three-month average is up slightly overall but still well down on the rates regularly seen before the slowdown really hit retail a year ago.”

The fall in sales could also reflect the fact that May last year was one of the most successful months of 2008.

Helen Dickinson, head of retail at KPMG, explains: “Stronger sales last year (May was the last month to report positive like-for-like growth in 2008) also impacted this month’s results. We might have expected better figures as while there are consumers struggling financially due to actual, or the prospect of, job losses, there are also those with greater disposable income due to lower mortgage payments, easing inflation and lower fuel costs.”

She adds that it remains to be seen when those who have cash to spare will feel confident to start spending again.
Despite the weak figures for May, sales during the month were broadly consistent with those seen over the six-month period prior to Easter. Vicky Redwood, UK economist at Capital Economics, says that, in light of this, the figures are less disappointing that they might at first appear.

However, she adds: “Nonetheless, we would not be surprised if the positive momentum continued to fade in the coming months. As the recession starts to take a wider toll on household incomes – through rising unemployment and weakening pay growth – the high street may become less insulated.”

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