Business

Weak demand for clothing hits shops

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The volume of goods sold in UK shops in February fell by 0.4% from the previous month, according to the Office for National Statistics (ONS).

The fall was less than feared, but it came after a higher-than-expected rise of 2.3% in January.

The ONS said the fall was partly a reflection of weak demand for the new season's clothing ranges.

This would bear out fears expressed on Thursday by High Street retailer Next, which has forecast a tough 2016.

Compared with the same month in 2015, retail sales rose 3.8%.

'Tight-fisted' shoppers

"After a better-than-expected January, Britain's retail sector will have been brought back down to earth by this set of figures," said Dennis de Jong, managing director at UFX.com.

"Shoppers tend to be tight-fisted after the January sales, but deeper concerns surrounding a possible Brexit might be making them think twice before spending.

"One silver lining will be George Osborne's proposed overhaul of the business rates system announced during last week's Budget, which has the potential to bring small retailers some much-needed relief. Whether that entices consumers back to the High Street is another matter."


Analysis: Jonty Bloom, business correspondent

It's not a double whammy, more of a treble whammy. The UK's High Streets are being hit by three problems.

There has been a long-term trend of shopping moving online: sales there are rising by more than 12% a year.

Online is also contributing to another problem: prices are falling in stores by 2.5% a year. That is a huge hit for shops. They can charge less and less each year, in part because online retailers have lower costs, but also squeezed consumers are searching for bargains these days.

The third whammy is that retail spending looks likely to slow down this year, as the economy both here and abroad is weakening. Online competition, slowing sales and lower prices: no wonder Next is warning this could be the worst year since 2008. Ouch.


Other commentators took a similarly mixed view of the figures.

"Retail sales fell less than expected in February, representing a smaller than feared payback from January's spending spree," said Markit's chief economist Chris Williamson. "However, all is not quite as rosy as the headline numbers suggest."

Mr Williamson added: "Spending is also being driven by low prices, as indicated by the value of sales rising just 1.4% on a year ago in February compared to the 3.8% rise in volumes.

"A healthier picture, and one that the Bank of England would clearly like to see, would be one where rising demand is allowing retailers to push up prices to a greater extent."

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