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Two weeks in the UK : Retailers are nervous

In the UK, retailers are nervous.

The September High Street Sales Tracker figure from BDO, published this week showed a 4% fall in retail sales year on year – the biggest fall since February 2009.

The BRC-KPMG Retail Sales Monitor, published today, was a little more hopeful thankfully, claiming UK retail sales values were 0.3% higher on a like for like basis from September last year - with food sales growth similar to the previous two months and non-food sales improving a little but remaining “challenging”.

It reports a sharp fall-off in clothing sales as the heat wave hit towards the end of last month.

Two weeks in retail

BRC director general Stephen Robertson said although there was a minor improvement on last month spending growth was still below inflation meaning customers have tightened their belts to buy less than last year.

The September CPI report is due from the ONS next week and will provide further guidance as to how the market is faring.

Retailers should take heart that the blame has been placed upon the unseasonably hot weather – meaning that fashion was particularly hard hit and saw a fall in sales of 5.1% according to BDO’s figures.

BRC director general Stephen Robertson said although there was a minor improvement on last month spending growth was still below inflation meaning customers have tightened their belts to buy less than last year.

The September CPI report is due from the ONS next week and will provide further guidance as to how the market is faring.

Retailers should take heart that the blame has been placed upon the unseasonably hot weather – meaning that fashion was particularly hard hit and saw a fall in sales of 5.1% according to BDO’s figures.

Although the change of weather from hot and humid to wild and windy may have sent shoppers scurrying back to the shops this past weekend for their winter-wear, the underlying economic worries continue to concern retailers large and small as they realise there is much to play for between now and Christmas.

The real nervousness stems from worries about the economy and despite the Bank of England quantitative easing measures to try to get shoppers spending again, as well as holding interest rates for another consecutive month, it was followed almost immediately by Conservative Party boss David Cameron urging UK consumers to clear debts rather than spend.

Tesco report fall in first half like for likeTesco meanwhile, suffered a near unprecedented fall in first half like for likes, whilst Mothercare also joined those reporting poor sales when it reported a 9.6% slump in like for like sales over the previous 12 weeks and a further marked fall off in the past four weeks leaving boss Ben Gordon feeling less than positive about the Christmas market.

Both financial reports have made retailers increasingly jittery and highlights to retailers and consumers alike that the UK’s largest retailer is not immune.

An early victim of administration in the past fortnight was clothing retailer Alexon, which fell, but was saved by in a buyout by private equity firm Sun European Partners as part of a pre-pack deal days later –allowing it to shed £12.9 million of debts.

Value retailers, unsurprisingly, are continuing to perform strongly as customers further tighten their belts with Aldi last week reporting turnover up by 4.6% to £2.1 billion.

Tesco meanwhile conscious of both its sales slip and consumer negativity launched a price drop promotion on 3,000 everyday products using the money it would normally have returned to customers through dropping double points to deliver more immediate savings to their pocket which should bode well for customers looking to make immediate savings now.

It is quite unusual for quite so much to have happened in only two weeks in the retail world and it has left retailers reeling and more nervous about the Christmas period than ever before. Whether consumer confidence returns in time for Christmas remains to be seen.

Christmas season has now well and truly begun for retailers and beyond the current Halloween push, will now become the main focus of retailer’s efforts.

They will be hoping that optimism and good cheer returns.

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