Retail Sales for December 2013 – Who is right? 5.3% increase on the year?

I love this time of year – Lots of experts predict how good or bad Christmas was for Retailers.  My view is to wait for the figures and you will see, but what I know from my clients and my own shops, is that is was an OK December.

Yes, you had to use clever discounting, but the customers did spend…..and they spent a lot online

CNBC report today backs this up and also points out that it’s the smaller retailers that did well – Great news for the small Independent Retailers out there

Small is better when it comes to shops and Customer Service

Surprise! British retail sales surge in December

Published: Friday, 17 Jan 2014 | 5:16 AM ET
By: Katrina Bishop | Deputy News Editor, CNBC.com

British retail sales came in way above expectations in December, official data showed on Friday, with strong growth at smaller stores resulting in the largest annual rise since 2004.

Retail sales volumes rose by 2.6 percent on the month, according to figures released by the U.K.’s Office for National Statistics (ONS) — the largest increase since February 2010. Economists had expected a 0.4 percent monthly rise, following an increase of 0.3 percent in November.

On the year, meanwhile, retail sales expanded by 5.3 percent — significantly higher than the 2.6 percent hike forecast by economists.

(Read more: Bazaar trade? Short-sellers target UK retailers)
Small retailers fared much better than larger stores, with sales 8.1 percent higher at small shops in December compared with the same month in 2012. By contrast, sales rose by 2.6 percent at large retailers.

Howard Archer, chief U.K. and European economist at IHS Global Insight, said the data indicated that consumers had postponed their spending to cash in on last-minute deals.
“The surge in retail sales in December following a muted overall performance in November and October indicates that consumers left much of their Christmas spending late in the hope of getting better late deals from retailers,” he said in a note.

“It also implies that spending was strong at the start of the clearance sales as squeezed consumers looked to take advantage of genuine bargains.”

The data will further boost expectations that Britain will post strong gross domestic product (GDP) growth in the fourth quarter of last year, amid increasing hopes of a sustained economic recovery in the country. The data is due to be released on January 27.
“December’s strong retail sales performance provides a major boost to hopes that GDP growth in the fourth quarter of 2013 remained up around the 0.8 percent quarter-on-quarter rate achieved in both the third and second quarters,” Archer added.

But despite this improving economic picture, Friday’s retail sales data were particularly surprising given the number of large U.K. retailers that had reported weak sales for the festive trading period, as heavy discounting and subdued consumer spending took their toll.

EY ITEM Club’s Senior Economic Adviser Andrew Goodwin said he was “extremely skeptical” about the retail figures.

“This is a massive upside surprise which really stretches credibility to the maximum,” he said in a note.

“If (the figures) are not revised then the chances are there will be a large fall in January. The numbers simply do not tally with what we have been hearing from companies over the last week. In particular, department stores and food retailers who, with few exceptions, have reported weak trading during the festive period.”

Clothes and food chain Marks & Spencer, for instance, reported its 10th consecutive quarter of falling clothing sales, although its food business, which represents over half of group sales, performed better than analysts expected.

It also contrasted with figures released by the British Retail Consortium (BRC) last week, which said December retail sales in the U.K. were up just 1.8 percent from December 2012. The BRC’s report is largely based on sales in larger stores.