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October sales worst for three years

Like-for-like retail sales fell by 2.2% in October, and total sales fell against the previous year for the first time in three years according to the British Retail Consortium.

Total sales were down 0.1% on October 2007, the first time retail sales have fallen below their year earlier level since April 2005.

The BRC said that clothing sales remained "poor" and were often discount-driven, despite more seasonal weather this October compared to the same month last year. Fashion sales have now been lower than the previous year for 11 of the last 12 months.

Footwear sales improved slightly on September, although this was largely discount driven.

At the department stores, designer clothing, which until now had been holding up, also slowed for some.

Meanwhile non-food internet and mail order sales in October rose 16.6% compared to last year but online sales did fall on the days following the banking crisis, with consumers anxious about the financial outlook.

BRC director general Stephen Robertson said: "These are seriously poor numbers, especially in the run-up to Christmas. For the first time in three years total retail sales fell into negative territory – further evidence of how difficult trading conditions are for retailers. Like-for-like sales have now fallen in seven of the last eight months with every sector down on a year ago apart from food and footwear. Shoe sales were driven by extensive discounts."

He added: "The negative sales figures reflect record low consumer confidence. These are tough times for families and retailers, who are hoping the Bank of England's bold interest rate cuts will provide a much-needed boost."

Helen Dickinson, head of retail at KPMG, warned: "A fall in the value of total sales is extremely rare - the last time it occurred, in April 2005, was due the timing of Easter. With shop price inflation rising at about 3%, the extent to which consumers have reduced the volume of purchases becomes apparent. It is unlikely that the much needed 1.5% rate cut will influence Christmas spending patterns - historically it takes a number of months for rate cuts to feed through into spending. Retailers can only hope that the October performance is not representative of consumers' spending intentions for the next six weeks. However, there is no doubt retailers will need to resort to heavy discounting to bolster sales over this crucial trading period."

Jeremy Rance, national director of retail and wholesale sectors, Barclays Commercial Bank added: "As we approach Christmas we are witnessing a tightening of consumer belts which has undoubtedly seen an increase in window shopping prior to a likely seasonal splurge closer to the holiday season. The interest rate cut may well bring welcome relief in the coming months but shopkeepers will have to be fully on their mettle if they are to grab their fair share of custom in the run up to Christmas."

Rance said: "Consumers are concentrating their lighter pockets on the weekly shop, seeing increases in food and drink, whereas the more luxury items, such as clothing and footwear, continue to bear the brunt of frugality as people are holding back in anticipation of early sales this year before making larger purchases."

"To attract the consumer in the current retail climate winners will be able to combine two key ingredients above all others – the ability to appeal to the shoppers 'impulse to buy' through innovation, design and quality, and good old fashioned ‘value for money."

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