High street sales volumes recorded an unexpected rise at the turn of the year - but battered retailers are being forced to drive trade through drastic discounting.
Figures from the Office for National Statistics show that sales volumes rose by 0.9 per cent last month compared with December, despite many analysts predicting a decline in trade.
However, the actual amount spent with retailers collapsed from ?42.1bn to ?24.6bn over the same period.
The high street also saw more business drain away to the internet. In January 2011 the average weekly value of online purchases was ?462.1 million, or around 8.9 per cent of all retail sales excluding vehicle fuel. A year later, that figure had risen to ?640.4 million, the equivalent of approximately 11.9 per cent of retail trade excluding fuel.
The British Retail Consortium (BRC) said that far from lifting the sprits of Britain's retailers, the ONS figures only confirm that consumers remain cautious and that sales are being driven by steep discounting.
It added that its own pre-Budget submission shows economic uncertainty is resulting in retailers hoarding cash reserves rather than investing in expansion or job creation.
BRC director-general, Stephen Robertson, said, "These numbers are slightly better than we would have expected but make it clear that price-cutting by retailers is what's driving any growth in business. Discounting is biting into retailers' margins with non-food businesses facing particularly tough times.
"We are looking to the Government for steps to inspire confidence in business. In his Budget next month the Chancellor must take steps to make it more attractive for retailers to invest and create jobs, and to improve UK competitiveness so they do that here. It's a mistake to see retail as a sitting duck. Retail investment is globally mobile and the UK has to fight for it.
"Reforming the flawed system for setting business rates, which this year threatens an unaffordable increase of 5.6 per cent, is key but so is work to simplify planning, expand online opportunities overseas and incentivising investment in new equipment and technology."
By Andy Jowett
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Source: http://www.enforbusiness.com/news/sales-rise-provides-little-cheer-price-slashing-retailers-20128011
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