Retail: Grocery Sales Strong In January

Figures show that UK retail sales were up 3.1% compared to the same period last year, when sales had only risen by 0.2% after a strong Christmas.

If clothes sales slowed down and furnitures sales showed no sign of improvement, home accessories, electricals and DIY sales were dynamic, even if partly explained by discounted prices.

However, it is food sales that looked the best and were at their strongest since last August when consumption was driven by a heatwave.

Kevin Hawkins, director general of the British Retail Consortium, comments, “The momentum which built up in December has carried through into the new year and this is the best January report for three years. It comes, however, with a strong note of caution. Much of the growth has been driven by the grocery sector and discounting has been fairly widespread in several other categories.”

Helen Dickinson, head of retail for KPMG, also insists the picture is not all rosy, “Not a bad set of results on the face of it, with like-for-like sales in January being 3.1%, the highest monthly increase since July 2006. However, it merely reflects the continuation of the trend which we saw in December, whereby it was only strong sales late in that month that gave many retailers something to cheer about over Christmas. It also comes on the back of a weak performance in January 2006. Many retailers will remain preoccupied with how to address store overheads, which are rising at a faster pace than their like-for-like sales.”

Overall, the British Retail Consortium believes that this growth has mostly been achieved through clearance sales and at the expense of margins. It notes a weakening of consumer confidence.