BRC remains cautious despite Christmas growth

The British Retail Consortium (BRC) has said that the strong December trading figures reflected a combination of “major one-off” factors rather than indicating a solid resurgence in the retail sector.

Retail sales values were 2.2% higher than in December 2010 on a like-for-like basis, with food sales showing particularly strong growth. Total foods sales grew 5.1% compared to the same period last year (October - December three-month weighted average) and 2.1% on a like-for-like basis.

However, the BRC remains cautious. Director general Stephen Robertson said: “A better-than-hoped-for December closed a relentlessly tough year for retailers, but these figures hinged on a dazzling last pre-Christmas week and were boosted by some major one-off factors. We’re not witnessing any fundamental change in customers’ circumstances.

“The comparison is with severe snow disruption a year ago. Discounting was deeper and started earlier and the vital Saturday Christmas Eve added another big trading day to the final run-up.”

Jenny Denny-Finch, IGD chief executive, said: “The challenging trading environment that characterised 2011 looks set to continue. Success in 2012 will require firms to ensure they adapt quickly to shoppers’ changing habits.”

Other figures released on Tuesday by Kantar Worldpanel showed that the grocery market grew below the 5.9% food inflation rate, at 4.8% per year in the 12 weeks ending 25 December, which it said highlighted the intense price competition between the major retailers.

Although footfall was up in many of the stores, basket sizes continued to fall and the continued growth of the discount stores showed that consumers were still shopping around, although Waitrose saw a 9% increase in market share.

Edward Garner, director at Kantar Worldpanel, said: “We continue to see a price war as the big four battle for market share. Tesco’s Big Price Drop has had an aggressive response from its competitors and put pressure on its share, which has slipped from 30.5% a year ago to 30.1%. In contrast, Asda has seen a strong year-on-year performance with its share up from 16.8% to 17.2%. This is in part thanks to the conversion of Netto stores, which it acquired earlier in the year.

“Sainsbury’s has also enjoyed a positive year-end performance with its Brand Price Match helping the retailer to grow its share to 16.7%. This is the highest share we have reported for Sainsbury’s since March 2003. Morrisons also achieved growth just ahead of the market and held share as a result.”

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