Retailers hail fastest sales drive for four years

A sharp rise in demand for furniture during the January sales has helped retailers bounce back from a mixed Christmas.

UK retail sales grew at the fastest pace for almost four years last month, according to the British Retail Consortium and KPMG retail sales monitor.

Like-for-like sales grew by 3.9pc compared to the same month a year ago, while total sales rose 5.4pc.

The figures represent the largest increase in retail sales since March 2010 and suggests confidence is improving among British consumers.

Retailers enjoyed a mixed festive season, with supermarkets suffering from a slowdown in food sales as consumers switched spending to homewares and electrical items.

The pick-up in the housing market led to furniture being the best-performing retail sector in January and recording its strongest rise in sales since April 2006. Bedroom furniture and sofas were particularly popular in the January sales.

David McCorquodale, head of retail at KPMG, said retailers will be “heartened” by the figures.

However, the sales growth in January was exacerbated by heavy snow disrupting transport links in the same month in 2013, although flooding has caused chaos across the UK so far in 2014.

Food sales also remain under pressure after a challenging Christmas for the leading supermarket groups. While like-for-like non-food sales rose 4pc over the last three months, food sales dropped 1.2pc,

“The divide between food and non-food is stark, with the battle for market share in food remaining ferocious, customer loyalty fickle and cost deflation being passed through to the consumer,” Mr McCorquodale said.

On the overall figures, he added: “These figures mark a strong start to the year for retailers. Most will take much from the positives and see genuine light at the end of the tunnel.

“However, behind the scenes some have had to discount heavily to secure these sales and will now be counting the cost of this strategy. Others have genuinely beaten expectations.”

Growth in non-food was underpinned by online sales, which rose by 19.2pc year-on-year, the best January performance since 2009.

But a fall in the number of empty shops in the UK suggests the high street is also benefiting from a recovery in retail sales.

According to the Local Data Company, the shop vacancy rate in the UK fell below 14pc at the end of 2013 for the first time since July 201. The vacancy rate is now 13.9pc, compared to a peak of 14.6pc in February 2012.

Helen Dickinson, director-general of the BRC, said: “January’s figures set 2014 off to a good start; however comparisons are against soft non-food sales in January 2013, which will not be the case in February.

“Given the underlying conditions, it remains to be seen how the trend for the rest of the year will pan out.”

Howard Archer, chief UK economist at IHS Global Insight, said it is “important to gauge the overall tone of the BRC survey and not just the growth figures”, given the distorting effect of the weather.