Government’s ‘recovery’ debunked

Recent official retail sales figures may have claimed a slight recovery on the high street, but investors shouldn’t necessarily pile back into the beleaguered sector, as other measures provide a markedly different view.  

Monthly retail figures released by the Office for National Statistics (ONS) suggested an encouraging upturn between July and August, with total sales volumes apparently rising by 1.2 per cent, driven by growth in textile, clothing and footwear sales.

But both the British Retail Consortium (BRC) and Deloitte believe the figures should be treated with caution, respectively claiming that the Bank of England is right to treat them as only one measure of retail performance, and that the figures should be viewed as a ‘one-off’ rather than an indication of underlying retail resilience.  

The BRC says they fail to measure like-for-like, with its own figures (which show sales down year on year for five of the past six months) proving how tough conditions are for consumers and retailers alike.

BRC director general Stephen Robertson says, ‘Fundamental conditions are weakening, not improving, and recent banking industry uncertainty can only make customers more nervous about spending.

‘Yes, clothing and footwear sales have risen, but that growth is modest and driven by discounts. It cannot be called strong and cannot explain ONS’s high overall figures,’ adds Robertson.

Tarlok Teji, head of retail at Deloitte, says that investors should remain wary of the current state of the sector, as once the Consumer Price Index is taken into account, the year-on-year increase of 3.3 per cent shows that growth is pretty flat. Consequently, Teji still believes that this is one of the toughest environments seen on the high street in a very long time.