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January sales up 2.3%, but at what cost to retailers? Monday, 6th February 2012
New data shows sales in January were 2.3 per cent higher for this year than the one before, but with prices coming in at 5.2 per cent lower than in December and 1.5 per cent less year on year, can retailers afford to make the discounts?
The figures from MasterCard Spending Pulse suggest that although January was a traditional month for sales, there had been a much steeper discount than usual on December prices.
Shweta Chaudhury, managing director of SpendingPulse, said: “We have seen modest sales growth but it’s definitely come off the back of price reductions. Obviously, stores gained volume, but it looks like they have sacrificed margins to boost sales.”
The figures will raise fears that consumers may be starting to expect price cuts. “There’s a risk here that retailers are conditioning shoppers to shop for discounts,” Chaudhury said. “The key question looking ahead is whether consumers are now fixed on retailer discounts or willing to buy again at full price?”
Department stores and clothing shops experienced a strong month, with sales rising 6.7 per cent and 6.3 per cent. Supermarket sales growth reached its lowest rate, at 0.6 per cent, since the survey began in March 2010.
Chaudhury added: “We have seen pockets of good news, around department stores and clothing, but we have also seen spending remain very subdued on furniture, which is very driven by the housing market. We saw a bad final quarter of 2011 and we have to be cautious because we have still not seen strong sales growth at full prices.”
The MasterCard data is extrapolated from credit card spending and survey-based estimates for cash and cheque payments. It tends to track the official figures from the Office for National Statistics, which will be published this month.