Retail sales disappoint in January
UK retail sales volumes, excluding fuel, rose by only 0.2% year-on-year in January according to figures released by the Office for National Statistics.
From December 2012 sales volumes fell 0.5%, excluding fuel, as heavy snowfall towards the end of January took its toll. The overall value of retail sales, excluding fuel, fell 0.1% from December and rose 1.2% year-on-year.
The figures were seen as disappointing as many analysts had predicted that sales would be higher.
The ONS said that the performance was partly driven by weak food sales which dropped 2.6% year-on-year to the lowest level since April 2004. It also said that smaller stores had struggled more than larger stores as many were forced to close in the bad weather. Larger stores saw an increase in online sales.
The amount spent online in the month accounted for 10.1% of all retail spending excluding fuel. In the food sector, the proportion of online sales rose 27% on the year, equating to a record 3.7% of all food sales.
Commenting on the figures, David McCorquodale, UK head of retail at KPMG, said: "Whilst the ONS statistics paint a negative picture, my sense is that January was in fact a relatively flat month. If you strip out sales of petrol, sales volumes rose marginally by 0.2% and values increased by 1.6%, which was slightly behind inflation. This appears to hint at continued margin pressure in the retail sector with goods being discounted to shift volumes.
"I am surprised to see the trend away from smaller retailers during the week of snow. A layer of snow normally drives consumers to local convenience stores, but it appears that the on-line grocers have picked up this volume, rather than the local convenience store.
"Generally speaking though, I still maintain that, despite the collapse of some High Street names in January, the larger retailers will be satisfied that their seasonal campaigns were successful. They are now dealing with much choppier waters in the food sector, which will have longer term ramifications for the industry."
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