Christmas retail sales 'not so buoyant'
Posted: Sat Jan 16, 2010 1:32 amThe widely reported success of the UK retail sector over the Christmas period may not be as buoyant as the figures suggest, a study has warned.
Verdict Research said firms had gained £14bn of extra trade that would have gone to rivals if they had not gone out of business over the past year.
It pointed out that companies such as Woolworths, Zavvi, Principles, and Bay Trading are no longer trading.
Verdict said retailers also benefited from more buying ahead of the VAT rise.
With VAT returning to 17.5% from the temporary 15% on 1 January, it said this gave retailers a one-off lift.
'Freed up sales'
Verdict's comments come after the British Retail Consortium (BRC) said the UK High Street saw its biggest rise in December trading for eight years.
The RBC estimates that like-for-like sales rose 4.2%.
Retailers from John Lewis to Sainsbury's, and Tesco to Poundland all reported strong sales over the Christmas period.
Verdict retail analyst Matthew Pinner said: "Big, high-profile collapses such as Woolworths have had all the coverage, but the relentless closure of small stores has done just as much to push up vacancy rates.
"This has freed up extra sales which have been absorbed by the bigger stronger players, lifting their sales."
'Tough year'
Verdict points to other one-off factors behind December's strong retail showing.
These include the cold weather boosting sales of warm clothing, food price inflation lifting the results of the supermarkets, and less discounting meaning consumers having to pay more.
Looking ahead, Verdict predicts that 2010 will be "tough" on the High Street.
"The extra spend freed up for survivors by casualties is a one-off gain, and we do not predict that there will be as many casualties in 2010 - most of the weakest have already collapsed," said Verdict's lead retail analyst Maureen Hinton.
She added that consumers are also concerned about higher taxes and continuing job insecurity.
As a result, Verdict predicts that consumer spending will only grow 1.1% this year, the second lowest rate of growth, after 2009, since its records began in 1966.
HMV has also admitted that their increased sales is in part due to the number of their rivals who have gone out of business.
