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Retail sales rise in July but Olympic boost might disappoint

Retail sales rose modestly in July but hopes that the Olympics will transform retailers’ fortunes are unrealistic, the British Retail Consortium and KMPG have warned.

Total sales values rose 2pc last month compared with a year earlier, below inflation, after warm weather at the end of the month and extended Sunday trading hours brought in for the Olympics provided a boost. It followed a 3.5pc rise in sales in June.

Like-for-like sales, which strip out the impact of additional floor space, were 0.1pc higher than July last year according to the report, beating economists’ expectations of a 0.2pc fall.

“Like-for-like sales were virtually flat compared with a year ago and total growth of 2pc was still behind inflation as consumers, dealing with squeezed budgets, prioritised their spending on essentials,” said Stephen Robertson, director general of the BRC.

Food retailers were helped as shoppers stocked up on party food and drink as the Olympics began, but a sharp fall in food inflation dampened top line growth.

Clothing and footwear sales were boosted by the wet weather throughout most of July which coincided with new autumn ranges hitting the shops, the report said. A rolling three-month average showed the growth of like-for-like non-food sales outpaced food sales for the first time since May 2010.

Helen Dickinson, head of retail at KPMG, said despite the rise in sales in July the latest figures reflected ongoing difficulty among retailers.

“Sadly July was a lacklustre month and it’s doubtful this trend will change as early expectations that the Olympics will raise retailers’ fortunes look to be wide of the mark.

“Central London’s retailers are already being hit hard by shoppers actively avoiding the capital. It’s likely that any blip of benefit the games bring will be short lived.”

Online retailers enjoyed their best sales since Christmas, up 15.6pc compared with a year earlier, as shoppers took advantage of promotions and opted to buy from the comfort of their own homes during the cold and wet weather.

Howard Archer, chief UK economist at IHS Global Insight, said retailers would be hoping for a prolonged warmer weather to encourage people to go shopping. He warned however it was “unrealistic to expect a sustained major pick-up in consumer spending in the near term at least”, as confidence remains low amid an uncertain economic outlook.

Source : Angela Monaghan

07 August 2012
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