Sales slump to hit high street in 2011 despite bumper sales over Christmas period

Sales slump to hit high street in 2011 despite bumper sales over Christmas period : Retailers are bracing themselves for a dismal 2011, despite reporting bumper sales over the festive period, according to the British Retail Consortium. Two thirds of retailers fear that sales will undershoot this year’s performance in 2011, while just 18 per cent expect an improvement, according to a BRC survey.

BRC director general Stephen Robertson warned that a combination of January’s pending rise in VAT from 17.5 per cent to 20 per cent – coupled with ongoing economic uncertainty – would cause shoppers to tighten their belts a notch further next year.

‘Retailers believe the VAT rise will contribute to higher prices and, with fears about government cuts and the wider economy, people will be put off spending.’

A report by the Centre for Retail Research for price comparison website Kelkoo estimates that retail sales will fall by £2.2billion in the first quarter of 2011 on the back of a VAT hike that it said would raise £13billion for the Treasury.

However, the BRC said that despite the forecast of sluggish spending patterns, retailers were prepared to help pick up the slack created by the loss of hundreds of thousands of jobs in the public sector.

Of the retailers polled, nearly a quarter are preparing to make cuts but some 47 per cent said they expected to create jobs in 2011, despite ongoing economic volatility.

And those who do keep their jobs can expect to avoid too much of a hit to their pay packets, according to the British Chambers of Commerce.

The BCC said a survey of 450 businesses revealed that just 6pc plan to cut wage packets during 2011. Approximately half expect to freeze salaries in the coming year, while an encouraging 45 per cent said they would increase pay.

A slew of High Street stalwarts reported a post-Christmas rush, as shoppers seeking bargains helped offset the impact of the snowy weather on mid-December sales.

House of Fraser – the first retailer to report the impact of an anticipated Boxing Day rush to the sales – said it had raked in £1million in record time, reaching the milestone before 11am yesterday.

And John Lewis said sales in the week ending on Christmas Day were up 30.6 per cent on last year to £97.1million, while the first day of its online clearance sale, on Christmas Eve, saw sales up 42 per cent. For the latest updates PRESS CTR + D or visit Stock Market news Today

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