Human Capital

Here in the UK, we’re always blaming the weather for things: after the ‘fluffy’ snow that caused power failures for Eurostar at the end of last year, BA said today that the crash-landing of one of its planes at Heathrow two years ago was down to ‘sticky’ ice. And the high street is arguably the worst for this: whenever there’s any kind of dip in sales, it’s usually because it’s too hot, or too cold, or too wet, or too dry. However, after last month’s wintry weather coincided with the worst January sales figures for 15 years, we reckon it’s fair enough this time round. No matter how tempting the bargains, not many people want to schlep to the shops through two feet of snow…

It was a pretty shaky start to the year for the high street, according to the British Retail Consortium and KPMG’s monthly retail monitor. The value of sales rose a measly 1.2% in January, which is especially disappointing after the (pre-VAT hike) 6% rise in December. Like-for-like sales fared even worse, falling 0.7%. This means January 2010 saw the lowest rate of growth recorded in the first month of the year since the BRC’s records began back in 1995. Yikes. And we’ve already seen one notable casualty: perennial basket case Ethel Austin is back in administration, for the second time in two years.

It wasn’t all bad news today: food sales were actually up in the first half of the month, partly because customers started stock-piling tins of baked beans and dried fruit in case they got snowed in. Non-store sales – i.e. internet, mail-order and telephone purchases – enjoyed substantial growth, up an impressive 14.6% on a year ago. And things picked up across the board in the second half of the month, as the snow melted and people returned to the high streets; this prompted small gains in clothes and footwear relative to last year’s totals.

Still, the worry remains that it wasn’t just the Arctic conditions that gave the high street the chills last month. January’s sales figures were also hindered by the VAT hike, which came into effect at the beginning of the year – presumably many customers decided to make large purchases at the end of 2009 instead. Retailers will hope that’s not a sign of things to come.

In today's bulletin:
Sterling pounded as euro plummets and deficit widens
Snow blamed for 'awful' January sales
BSkyB swallows £350m loss on ITV stake
Graduate jobs down just 9% in 2009
The value of battle-scarred execs