Tough year ahead for UK retailers with 60 per cent anticipating decline in sales

29 Dec 2010

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The majority UK retailers expect a decline in sales in 2011, as austerity measures and soaring costs of cotton and wheat take a heavy toll of consumer spending.

According to The British Retail Consortium, the trade body for store groups, around two-thirds of retailers responding to a survey on sales prospects expected a decline as compared with 2010 with some 18 per cent expecting an improvement.

Stephen Robertson, director general of the BRC, said the snapshot showed retailers expected a difficult December to be followed by a tough 2011. He added they believe the VAT rise would contribute to higher prices, and, with fears about government cuts and the wider economy, people would likely put off spending. 

Retailers seem to be worried about the prospects of 2011, due to the impending increase in VAT from 17.5 per cent to 20 per cent on 4January.

Though this could have led consumers to advance some spending on ''big ticket'' items, such as furniture and large electrical products, it could mean a corresponding loss of sales in January.

Retailers are also seeing prices of clothing rise, due mainly to the soaring cost of cotton, although inflation in China and exchange rate issues are also fueling increases.

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