Retailers across the country will have breathed a sigh of relief this week with the news that sales grew at their fastest rate in years in February. With businesses in all industries preparing themselves for a further plunge into recession, it is hoped that the apparent turnaround in consumer confidence will be enough to allow the UK to post growth.
According to figures released on Tuesday by the British Retail Consortium (BRC), like for like retail sales increased by 2.7 per cent last month when compared to the same period last year. This is the fastest monthly growth since December 2009, when like for like sales rocketed thanks to the impending Christmas season.
The BRC claims that the welcome boost was largely due to an increase in demand for electrical goods, calling the electronics sector the “growth engine” for the high street. However, food sales also managed to climb by 1 per cent despite concerns of a negative consumer reaction in response to the horsemeat scandal.
Chief executive of food data provider IGD, Joanne Denney-Finch, believes that consumers chose to change their spending habits rather than cutting back on their weekly shop.
She says; “Although there was a lot of ‘switch buying’, such as a fall in frozen burger sales in favour of more ingredients to cook from scratch, the overall effect on food and drink sales was neutral.”
The timing of retail recovery could be closely related to the fact that consumer confidence appears to finally be on the rise. In fact, a study by GfK demonstrated that the public’s optimism regarding their own personal finances rose to the highest levels in almost two years during February.
However, director general of the BRC, Helen Dickinson, has warned retailers not to assume that one month of improved performance spells the end to the troubles on the high street.
She says; “February saw growth across all parts of retailing, with big ticket goods and items for the home recovering particularly well.
“There are certainly highly welcome signs here of gradual improvement and customers feeling a bit more positive.
“But it’s too soon to assume this represents the permanent turnaround we need.
Hopefully, with forecasters predicting the imminent arrival of spring, consumers will continue to enjoy a boost in confidence throughout the warmer seasons and begin to put four years of recession behind them. However, with recent reports showing the UK remains at risk of a further drop into recession, it seems that winter is not quite over for Britain’s struggling retailers quite yet.
Do you think February’s performance indicates that consumer confidence is growing amongst the British public, or was it simply a one off event thanks to a slightly more reserved Christmas spend than usual? Will the upcoming warm weather encourage spending, or will consumers choose to save for summer holidays instead?
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