Slow August for high street

8 September 2009

Sales on the high street fell back in August - breaking the recent run of increases, the latest British Retail Consortium (BRC) figures have revealed.
Like-for-like sales in the UK - which exclude new stores - were down 0.1% compared to last August. Having seen growth of 1.4% in June and 1.8% in July, there had been hope that consumers were returning to the high street.

But Howard Archer, chief UK and European economist at IHS Global Insight, says the fall represents a "disappointing relapse".

The BRC’s report, compiled in conjunction with accountancy giant KPMG, blames the wet weather for the dampened levels of spending. Stephen Robertson, director general of the BRC, says the decline in non-food sales also suggests people were holding off buying autumn and winter clothing.
"It's clear the deceptively good sales growth of [June and July] was due to summer sun and price cuts - not any major revival in how customers are feeling,” he adds. “What spending we now have is all about value and essentials.”
The BRC also warns that consumers are reluctant to part with their cash, particularly on big-ticket items, as many households are still facing serious pressures on their finances and a lack of job security.
Archer agrees that rising unemployment, low earnings growth and heightened debt levels are all weights on consumer spending - and discretionary spending still needs to be encouraged by bargains or good weather.
Helen Dickinson, head of retail at KPMG, is concerned about the impact on shops. "The results for the month and the rest of the year need to be considered in the light of the performance last year, which continued to weaken as the year progressed,” she says.

“Negative like-for-like sales on the back of the same situation last year is leaving many retailers with some serious challenges around controlling costs and generating cash."
However, Archer believes there are some glimmers of hope in the shape of other consumer data.
"Car sales rose in July and August, fuelled by the scrappage scheme, while the Bank of England's regional agents observed in its August report that the decline in consumer spending on services is continuing to slow, " he explains. Such factors mean the UK economy could still return to growth in the third quarter.

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