Retailers enjoy boost from early sales (well, some of them do)

The ONS says high street sales saw a modest rise in June - though some retailers are still moaning about the weather...

by James Taylor
Last Updated: 19 Aug 2013
After May's gruesome retail sales figures, the Treasury will have been hoping and praying for a recovery in June - and it looks like we had one, just about. The Office for National Statistics said today that high street sales rose 0.7% month-on-month, or 0.2% year-on-year. Nothing to write home about, perhaps, but a step in the right direction. That said, if retailers are only managing to shift their stock by slashing prices, it's not going to do their margins any good. And consumer goods companies are clearly still finding life tough: both Britvic and Kingfisher reported falling sales today, which they blamed on all this rotten weather we've been having. That time-honoured excuse...

June's bounce-back didn't quite make up for the 1.5% dip in May, but it did make up for some of the lost ground. However, the consensus seems to be that this was largely due to retailers (including the likes of Marks & Spencer and John Lewis) starting their summer sales early, which seems to have succeeded in persuading reluctant shoppers to start spending again. And there are two obvious problems with this strategy: one, it will hit margins in the near term, and two, they may just be bringing forward business from later in the year. So some economists reckon we might see another slump in July as a result.

The weather can't have helped, of course - particularly if, like Britvic, you make your living selling fizzy drinks. Its sales were down 8.2% in the four weeks to July 10, while it's just experienced its first quarter-on-quarter decline for two years. Kingfisher has apparently been having similar problems: it blamed the weather for a 5.5% fall in like-for-like sales during the 11 weeks to July 16, including a 6.7% drop at B&Q. You might think people would be more likely to crack on with the tedious work of DIY when it's sheeting down outside. But we suppose they won't have been buying much garden furniture.

Still, if blaming the weather for falling sales is a familiar tactic in the retail world, another of Kingfisher's excuses was more novel: it bemoaned the collapse of rival chain Focus DIY. Now it might seem ridiculous on the face of it to complain about the demise of one of your biggest competitors. But apparently the remaining Focus stores have been flogging their remaining stock at fire-sale prices, which has inevitably taken a bite out of B&Q's sales.

So it's a familiar picture, really: the high street is still having to work extremely hard to persuade customers to part with their cash, and life remains a struggle for anyone whose produce falls into the 'discretionary purchase' category. It's hard to see that changing any time soon, either.

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