Online Sales Boost A 'Sluggish' December

Ursula Errington, Business Reporter

Strong online sales in December have buoyed what has been described as an "underwhelming and sluggish" Christmas on the high street.

The British Retail Consortium (BRC) said retail sales for the month were up just 1.5% compared to the Christmas period in 2011.

However Internet sales rose by almost 18%.

If the online contribution to total year-on-year sales growth is stripped out, it shows that high street trading stagnated compared to last Christmas.

"Online retail still accounts for a relatively small part of total sales," said BRC director general, Helen Dickinson.

"But in December it played a disproportionately larger role in driving non-food sales.

"Shoppers took advantage of the investment many retailers have made in making their websites easier to use across multiple devices, in flexibility of delivery options as click-and-collect came of age, and in security - they now feel much more comfortable putting their credit card numbers into their mobile phones."     

Pimlico-based florist, Rosemary Watkins, knew it would be a tough December for the shop she has worked in for three years but it was worse than she imagined.

They closed early on December 24 and in the run-up to Christmas they hardly saw what could be termed as Christmas trade.

"We had the shop ready from the first week in December," she told Sky News. "But what we anticipated would happen, didn't happen.

"We were lucky to sell what we did. We had to stop buying stock as it's perishable; you can't hold onto it. If it's this bad here in SW1 I can't imagine what it's like in other parts of the country."   

Footfall was down considerably on last year largely because of bad weather and consumers buying more in one go, thereby reducing the opportunity to browse and be tempted to buy.

But perhaps the most influential factor was the shift towards the internet. It appears fewer shoppers were searching in stores first, before going online.

Pharmacy owner Nishma Hirani is just a few doors down from Rosemary's florist. She has decided to focus on internet sales of perfume and her higher-end health and beauty products for Christmas 2013.

She also intends to modify how much stock she carries in the run up to next Christmas. The BRC survey showed that generally, retailers bought in less stock and held off offering heavy discounts in order to keep their margins up.

But optimistic Nishma did not do that. Buoyed by solid sales in last year's difficult climate, she bought a lot of stock and is now stuck with it.

Surrounded by perfumes bearing sale stickers she explained: "Last year people were buying four or five bottles of perfume at a time but this year they only bought one or two - not bulk buying.

"We kept our stock quite high but we just didn't find it was moving as quick as we would have liked it too."

Overall, the BRCs outlook for this year is subdued. They have said their members expect the hard times to continue but not worsen, with this "bumping along the bottom" effect to continue for perhaps years to come.

KPMG's head of retail, David McCorquodale, said: "While consumer confidence remains low, shoppers will tighten their belts and rein in their spending, making life difficult for the average UK retailer.

"There will be no boom and it's likely more than a few will go bust".