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Deep discounting in December helps sales edge up

Promotions and discounts helped drive some festive sales growth for clothing and footwear in December as like-for-like retail sales grew 2.2% compared to December 2010.

The December sales performance was the best since January 2011 after factoring out any Easter distortions, according to the BRC-KPMG Retail Sales Monitor. On a total basis, sales in December 2011 were up 4.1% against an increase of 1.5% in December the year before.

Non-food sales improved during the month, however sales were often led by promotional activity.

Clothing

After November’s weak sales clothing showed good growth but sales growth was flat when compared with last December.

Outerwear and heavy knitwear were hit by mild weather and consumer confidence with shoppers waiting for promotions after cold weather came too late in the season. Menswear outperformed womenswear with shoppers buying gifts as well as purchasing coats and suits in Sales. Handbags also benefitted from clearance discounts.

Kidswear sales during the month held up with the category being seen as more essential than adult clothing.

Footwear

Boots proved popular throughout December, particularly casual styles. On shoes, plain styles, which could be worn for both work and leisure, sold well.

Aggressive discounting largely drove the sales growth throughout the month alongside further markdowns in clearance events. Value ranges continued to prosper as the squeeze on spending rumbled on, however, designer ranges made gains for some retailers, particularly in clearance Sales.

Department Stores

Most department stores had a better month with Sales events, promotions and some clearance Sales helping shoppers seek out good deals. Clothing and footwear sales in these stores also improved.

Internet and mail order

Non-food non-store sales were up 18.5% on the comparable period last year, which was the strongest growth since September 2010 and more than double November’s 8.6% increase. Despite the very strong year-on-year growth in the week before Christmas comparisons are tough due to freezing conditions last year, which discouraged consumers from shopping online due to delivery disruptions.

Good credit deals and free deliveries attracted shoppers over December with consumers also taking advantage of widespread promotions and discounts in the run-up to Christmas.

 

Stephen Robertson, director general at the British Retail Consortium, said: “A better than hoped-for December closed a relentlessly tough year for retailers, but these figures hinged on a dazzling last pre-Christmas week and were boosted by some major one-off factors. We’re not witnessing any fundamental change in customers’ circumstances.

“The comparison is with severe snow disruption a year ago. Discounting was deeper and started earlier and the vital Saturday Christmas-Eve added another big trading day to the final run-up. Post-Christmas offers brought large numbers of shoppers out but that was generally a short-lived hunt for bargains. With discounting driving sales at the expense of margins the key question for retailers is about earnings from those sales.

“A solid December result hasn’t rescued a pretty miserable year. Whole-year figures show minimal growth in 2011. For many customers, economic reality has bitten again since the New Year and, with consumer confidence returning to levels last seen during the recession, 2012 is expected to be an equally challenging year.”

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