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Retail Sales in UK Picked Up in December
Jan 30, 2008

Retail sales in the UK experienced a boost during the holiday season in 2007 for a variety of reasons as retailers resorted to strategies of all kinds to tempt consumers to spend.

Findings from MasterCard, the credit card company, indicate a 2.1% increase in retail sales month-on-month in December 2007 in the UK. It kind of compensated for the decrease experienced in the previous month, reported
Reuters.

In the opinion of industry watchers, the boost in retail sales was a result of increased electronic spending apart from significant year-on-year profits of grocery stores and personal care retailers. In addition, retailers are making efforts to urge consumers to use gift cards at the earliest with most stores delaying revenue booking till the time the increasingly popular cards have been redeemed against goods.

Christmas and New Year discounts by retailers also contributed to the hike in retail sales in December 2007. Holiday shopping evoked enthusiastic response from consumers. In the UK, there was also anticipation for price reduction in the retail industry due to the discomfort arising from high gasoline prices and escalating housing prices since the beginning of 2007.

Retailers left no stone unturned in terms of strategies for increasing sales with Internet shopping gaining prominence over shopping directly from shops. Then there was wage hike in December last year due to holiday season bonus that pushed up the UK’s retail sales.

December 2007 also proved to be a beneficial month for the retail industry growth with the benchmark interest rate being brought down by the Bank of England from a six year record from 2001 to 2007. The official explanation was the threat to economic growth from the increase in credit costs.

But the British Retail Consortium (BRC) has expectations of a turbulent beginning in 2008 due to the impact of mortgage costs, higher utility bills, fuel costs and uncertainty over house prices. But the primary cause for the serious apprehensions for January 2008 is the healthy holiday sales.

In the view of a Senior Research Analyst at
RNCOS, “Throughout 2007, retail sales in the UK were reeling under the impact of rising mortgage and fuel prices. A number of temporary reasons however contributed to pushing up retail sales in December 2007. Thus, the need is for retailers to carry on with discounts for a longer period to attract more customers.”

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