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August retail sales tumble as riots take toll

Retail sales dropped significantly at the start of August, according to the first set of general trading figures produced since riots wreaked havoc across the UK earlier in the month.

The Confederation of British Industry’s (CBI) Distributive Trades Survey, which covers the period between July 28th and August 16th 2011, shows that the volume of retail sales fell at the fastest pace since May 2010, on a year-on-year basis.

Some 31 per cent of retailers saw the volume of sales increase in the two-week period and 46 per cent noted a fall, resulting in a rounded balance of minus 14 per cent - the most negative figure for 15 months.

British Retail Consortium figures released yesterday show that retailers lost more than 7,500 hours of trading and around 900 stores were affected by the waves of violence, looting and arson that crashed over British towns and cities during a dramatic four days.

The survey was conducted among the trade group’s members, which only account for 27 per cent of UK retail sales, meaning the actual number of businesses impacted by the riots is likely to be far greater.

CBI’s data indicates that grocers reported a modest year-on-year increase in sales at the start of August in spite of the troubles, but clothing specialists, durable household good traders and hardware & DIY businesses performed badly.

It was also noted that retailers were the most negative they have been about the general business situation in the UK since February 2009.

Samuel Tombs, UK Economist at research consultancy Capital Economics, said: “It looks as if the recent falls in equity prices and the riots which both occurred at the start of the month may have taken their toll on consumer confidence and spending.

“Whichever way you look at it, then, it’s clear that fiscal austerity, rising inflation and increasing unemployment are combining to put an end to any recovery on the high street.”

According to the CBI, employment in the retail sector was down seven per cent on a year ago, although expectations for the next three months are the least negative they have been since February 2004, with businesses perhaps preparing to ramp up recruitment levels in time for the busy Christmas period.

Judith McKenna, Chair of the CBI Distributive Trades Panel and Asda’s newly appointed Chief Operating Officer, said today’s results come as consumers continue to contend with their real incomes being squeezed by a combination of inflation and weak wage growth.

“This survey suggests that prices will rise more slowly in the coming months, and savvy retailers will continue to offer consumers the lowest prices possible,” she remarked.

“But with energy and commodity costs still high, families’ spending power looks like being constrained for some time.”

Source : Ben Sillitoe - Retail Gazette

25 August 2011
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