Retailers 'feeling the pinch'

02-11-2007

Retailers 'feeling the pinch'
The growth in UK retail sales dropped back to its lowest level in almost a year in October, new research has claimed.

The survey of 146 retailers, covering more than 20,000 outlets, found that 33 per cent of respondents reported a drop in year-on-year sales in the first half of last month.

That compared to the 42 per cent of retailers who said sales were up.

According to the Confederation of British Industry (CBI), which carried out the research, the rounded balance of plus ten is the lowest sales reading recorded in its monthly retail poll since November 2006.

Although retailers said they were more upbeat about sales prospects for November, the CBI said its distributive trades survey showed the impact of higher interest rates was beginning to bite on the high street.

John Longworth, chairman of the CBI's distributive trades panel, commented: "The high street has seen another month of slower growth in retail sales, and although some retailers are doing better than others, it is clear that the buoyant trading period enjoyed earlier this year has tailed off.

"Although slightly better sales are expected in November, retailers' hopes have been disappointed for the past few months, and they anticipate only subdued growth in the important run-up to Christmas," he added.

The CBI said that with consumers apparently tightening their belts following five interest rate rises over the past year, and growing economic uncertainty prompted by the ongoing global credit crunch, the slowdown in retail sales was expected to continue into next year.

Meanwhile retailers have been warned that the early adoption of festive campaigns risks irritating their customers.

Research group SPSL says that footfall in the UK's non-food stores fell by 1.7 per cent in September – marking a 1.2 per cent drop on the same month of the previous year.

The organisation, which measures the number of consumers who enter various stores, said the fall could be the result of growing shopper unease about the ever-longer run up to Christmas that retailers are indulging in.

"What we are beginning to pick up is people reacting against the growing levels of Christmas-themed product, advertising and in-store merchandising creeping into stores and onto our TV screens, by the middle of October," explained SPSL's retail psychologist Dr Tim Denison.

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