British retail sales fell down successively for the fourth time in 2008 due to adverse conditions emerging from global financial crisis. Among all segments, only food and drink sales were positive.
According to a survey conducted by the British Retail Consortium (BRC), British retail sales recorded a decline for the fourth time in a row in September 2008 on YOY basis. This fall is due to the terrible performance of furniture stores in last eight years, as reported by guardian, on October 14, 2008.
The sales values were recorded 1.5% less in September 2008 as compared to that in September 2007. It was the steepest fall registered since April 2008 and this indicates that the sales have fallen in the same way in six out of past seven months. Again, total retail sales value in September 2008 is considered to be the weakest growth rate since April 2008.
The decline in the retail sales in the UK in September 2008 was due to the scarcity of credit and housing market limitations. Consequently, a steep fall in the sales of fitted kitchens, bathrooms and other furniture was noticed. Even high discount rates and promotional schemes turned out to be useless.
Further, the financial crisis also contributed in ruining confidence of the consumers. People have become more vigilant and judicious while making purchases and are completely avoiding impulse buying. Another reason behind the declining value of sales in September 2008 was the wet weather.
Moreover, clothing, home wares and furniture all faced an additional decline in their annual sales. Only food and drink sector was been able to register a rise in the sales value in September 2008 as compared to September 2007; however, this growth wasn’t due to volume sales but value sales because of inflation.
These figures of retail sector were seen after the Bank of England cut down its interest rates corresponding to other major central banks in the first week of September 2008. In spite of the mounting inflation in recent times, policymakers paid stress on the fact that immediate plans should be made to overcome the financial crunch that has caught hold of whole market.
According to a Research Analyst at RNCOS, “Though September 2008 saw a decline in retail sales in the UK, but this weak price data will certainly cause the Bank of England to cut interest rate. It will provide the British retail sector the opportunity to bounce back with additional capacity in a short span of time.”
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