Seven years of the toughest trading conditions in living memory have embedded a high level of caution into the psyche of retail bosses.
Seven years of the toughest trading conditions in living memory have embedded a high level of caution into the psyche of retail bosses. And it ensured this week’s figures showing January retail sales rose at their strongest rate in four years were met with a degree of scepticism.
Retail like-for-likes rose 3.9% in the month, when total sales forged ahead 5.4%. It was the fastest growth since March 2010, according to the British Retail Consortium, and it is the sort of performance that will be seized on by those keen to talk up a sustained recovery.
But caveats undoubtedly remain. The growth in January was exaggerated by weak comparisons the year before, when snow caused chaos, and February will offer a tougher like-for-like challenge. There are also concerns that sales have been acquired at a cost, with the level of discounting in many sectors distorting consumer spend and securing sales at unsustainable levels.
Finally there is the performance of the grocery sector, which once again endured a difficult month, evidenced by food sales falling 1.2% year on year in the three months from November. It remains hard to argue that a broad-based recovery can take root when such a key sector continues to stumble.
But most will still be able to take positives from the performance in January. While the discounts may have been heavy, they still succeeded in tempting shoppers into stores. And the fact last month’s growth was led by big-ticket items such as furniture indicates purse strings may finally be loosening when consumers are given the right reasons to indulge – a trend that should continue as the boom in the housing market fuels these categories further.
But it is the stark divide between the results of the food and non-food sectors that’s most interesting and points to the shape of the retail recovery in 2014. Instead of indicating an apparent weakness across the sector, food may need to be increasingly viewed in isolation, with the habits born from the recession in grocery – whether it’s the move to convenience, the growth of the discounters or the promiscuous attitude of consumers – far more ingrained than in other categories.
Rather than being an example of continued economic uncertainty, the performance in food is a result of structural changes that are now rooted in the way we shop – changes that even rising employment rates and consumer confidence will find hard to unpick.