High demand due to New Year, heavy discounts and better performance by food retail sales boosted the overall retail sales in the UK during January 2009.
The UK retail industry reported improvement in sales during January 2009, said the British Retail Consortium (BRC), as reported by BBC.
The annual (like-for-like) retail sales in the UK during January 2008 surged 1.1% over the corresponding month previous year and the highest increase since May 2008. In December 2008, retail sales slumped 2.2%. Higher food sales, which increased 5.1%, was the main factor for strong performance of overall retail sales. However, non-food sales, including clothes, homeware, health and beauty products, and footwear witnessed a steep fall of 1.6%. The overall sales - which also included contribution of new stores - climbed 3.2% with non-food sales rising 0.8% and food sales increasing 6.8%.
Defying prediction of 1% YOY decline, retail industry started 2009 on a positive note.
Heavy discounts at stores mobilized people to spend more on goods that accelerated the UK retail industry sales. Even retailers exploited the high demand for retail goods on account of New Year by offering insatiable discounts attracting people to stores.
Demand for food items increased in January 2009 as the food inflation was very low. Moreover, casserole meats and other comfort foods saw hike in their demand due to cold conditions in the country. Hence, all these factors played critical role in rising demand for retail sales.
Although the retail industry stepped in 2009 positively, the same scenario is unlikely to continue in coming months. Consumer purchasing power is expected to be battered further in coming months with the fall in home prices and more retrenchment by companies. Fear of bleak future will encourage consumers to save; therefore, they will remain reluctant to purchase.
To stimulate sales and improve consumer spending, the Bank of England reduced the benchmark interest rate to a new record low of 1% in the first week of February 2009. It will help to boost the consumer confidence and encourage buyers to search for attractive finance deals.
According to a Research Analyst at RNCOS, “Sales figure for the month of January 2009 give every reason to be optimistic for future growth, but the fundamentals haven’t changed as consumer confidence is still very low.”
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