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Retail sales drop ahead of Black Friday

Retailers suffered sluggish sales in October as shoppers held out on spending ahead of Black Friday on November 27.

The amount bought in the retail industry during October fell 0.6% on the previous month, according to the Office for National Statisics. It follows a surge of 1.7% month on month in September, off the back of the Rugby World Cup and an early bank holiday weekend.

Sales were up 3.8% year on year, compared with a 6.2% rise in September. The ONS said department stores and clothing also pulled down retail sales growth last month.

David McCorquodale, head of retail at KPMG, said consumers were likely holding out for a “Black Friday blow out”.

“Although year on year overall retail sales for October showed a positive, if small, increase, sales were actually down compared to the previous month. No doubt the milder weather will have influenced buying behaviours with many putting off winter purchases until the cold snap hits.

”Consumers are also likely holding out for the Black Friday blow out at the end of November to bag a bargain.

“With consumers still hooked on their diet of discounts, retailers in some segments are continuing to feel pricing pressures. Despite consumers buying more goods, deflationary pressure has meant that the amount spent has declined highlighting the persistent impact of discounting on the bottom line.

“Elsewhere, the online channel had a positive month with penetration rates on the up. With arguably the most important e-commerce days of the year approaching, online retailers need to make sure they are at the top of their game. This not only means ensuring that websites are fully operational, but also that supply chain and fulfilment operations need to be performing to the highest levels.

“Black Friday next week will be the first, and potentially hardest test of these systems. Retailers need to make sure all systems for sales and handling returns are reliable or risk a frosty reception from customers.”

Ian Gilmartin, head of retail and wholesale at Barclays, added that it’s “natural to see a pause before we hit Black Friday and the Christmas trading period”.

Gilmartin said research suggests UK retailers are confident about the upcoming season, with 79% expecting revenues to increase compared with Christmas 2014.

He said: “If retailers can get their Christmas plans right, including managing their level of discounting around Black Friday carefully, the industry should still enjoy a positive end to the year.”

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