Heavy snowfall at the beginning of the month led UK retail sales values to drop 0.3 per cent on a like-for-like (LFL) basis in December, according to new data.
The British Retail Consortium (BRC) & KPMG’s latest Retail Sales Monitor shows non-food was hardest hit by the poor weather last month, as total sales grew just 1.5 per cent year-on-year compared to a six per cent rise seen in December 2009.
Internet, mail order and phone sales increased 18 per cent in the month which helped to offset consistently poor non-food sales which were down 0.8 per cent LFL on a three-month weighted average to the end of 2010.
Stephen Robertson, Director General of the BRC, commented: “The unusually early winter weather made a difficult Christmas worse. With mounting concerns about the impact of spending cuts and the wider economy, sales growth has been weak since last summer.
“December was always likely to be similarly unspectacular but the snow and ice dealt an extra blow to business for many retailers.”
Trading at grocers fared better than at other retailers during the three months to December, with food sales growing 4.4 per cent in total and 2.1 per cent on a LFL basis.
The Christmas period saw much slower trade than was hoped, however, and it will put many retailers in a challenging position at the start of this year.
Helen Dickinson, Head of Retail, KPMG, said: “December is the biggest month of the year with volumes 20-30 per cent higher than other months.
“Very disappointingly, without the impact of the arctic weather the results would have been noticeably better.”
Vicky Redwood, Senior UK Economist at Capital Economics, estimates that two per cent was knocked off sales growth in December due to the weather and warns that this may have slowed overall economic growth in the fourth quarter.
“It is looking increasingly likely that the snow means that overall GDP growth in the fourth quarter was a touch weaker than it otherwise would have been,” Redwood explained.
“The Q4 British Chambers of Commerce survey released overnight supported other evidence in suggesting that a strong manufacturing recovery is being tempered by a more sluggish pick-up in services sector activity.”
The BRC is still remaining positive about the long-term outlook for UK retail but insists that the government must not strangle the industry further with red-tape when it is in a fragile position.
Robertson added: “This is no return to the dire picture two years ago, but the message for the Chancellor is: concentrate on delivering growth and leave any new burdens out of your March Budget.”