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Final-quarter sales hold the key to interest rates

Alan Hawkins

There may have been a blanket of snow across the country before Christmas, but the outlook for retail was anything but (deep and crisp and) even.

There may have been a blanket of snow across the country before Christmas, but the outlook for retail was anything but (deep and crisp and) even.

Anecdotal evidence suggests festive season sales for indies were building quite nicely until the snow fell and at that point the picture became very patchy. For some, sales hit the skids.

For the first time in ages, out-of-town centres felt a chill as cars stayed on the drives and, in a real first, internet sales suffered a last-minute freeze as concerned gift-givers hesitated to buy when on-time delivery became uncertain. Town centre retailers, independents among them, might just have gained from inclement conditions. Some big-ticket sellers reported last-minute

pre-VAT rise activity, but it is a fair bet that canny consumers will have counted on retailers holding pre-VAT increase prices, at least until the stock already in stores at the time of the rise to 20% has left the premises.

The big picture will be that of the whole of the last quarter of 2010 (the BHF-BSSA Sales Monitor reports formally a couple of weeks hence) and only part of that was snowbound. That final quarter will be critically important for interest rates. Remember them? Well, some at the Bank of England are keen to mark the arrival of recovery with a chunky rate rise and the signal to do so will be a third quarter of solid growth to follow the two already booked. If interest rates go up then mortgage lenders will not be slow to raise rates and the third of households in the country that pay a mortgage will find their spending power drained.

As ever, whenever consumer confidence is shaky, the best retailers with the best buyers, the best trained sales staff and the best marketing will shine.

Alan Hawkins is chief executive of independent retail trade body BHF-BSSA Group

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