High Street Spending at Lowest Level for 16 months

High street spending has slumped to its lowest level in 16 months as cautious shoppers stick to necessities, research by the Confederation of British Industry (CBI) has found.

The CBI said that while 24 per cent of retailers saw sales volumes rise year-on-year in September, 39 per cent reported a fall, with the balance of -15 per cent indicating a drop in activity. Sales volumes are expected to decline at a similar rate in October, it said. 

The figures represent the weakest reading for retail sales volumes since May last year and are likely to fuel concerns for overall economic growth in the third quarter.

Rising unemployment, high prices and low wage growth were to blame for sluggish high street sales, said the CBI.

“Shoppers are still clamping down on discretionary spending and focused on buying the basics at the best price.”

said Judith McKenna, chair of the CBI distributive trades panel and Asda chief operating officer.

She warned retailers that a challenging October looked likely, due to rising winter utility bills putting a further squeeze on household incomes.

Shane Brennan, public affairs director at the Association of Convenience Stores, said smaller retail operators on the high street were especially vulnerable and faced extremely tough times.

“The weak economic outlook is a big worry for independents. Small shops are able to reduce costs better than big organisations ? typically, owners cut staffing levels and simply work longer hours themselves ? but they cannot run at a loss for long, unlike big chains which can usually absorb poor trading more easily.”

he added.

But some smaller food and grocery operators were benefiting from underlying growth even in the current climate, Brennan added:

“We’re seeing more shoppers avoiding the big weekly outlay at the supermarket and instead buy food from their local corner shop. People are also travelling less to save on petrol, which is helping to boost trade for some.”

“However, it doesn’t look as if the rest of this year will provide much cheer for retailers and most are looking ahead to 2012 before expecting things to pick up.”

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