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UK retail sales rise 1.6% over Christmas period

While the headline figure with a 1.6% rise in retail sales over the Christmas period would normally make good reading for analysts and investors everything is not as it seems. Despite the rising figures, there was a 0.8% fall in the value of sales suggesting that steep reductions and excessive promotions have taken the wind out of the sails of the UK retail market.

As we have written about of late, the UK food sector appears to be the strongest in the retail industry and the vast majority of reductions and promotions have come in the non-food sector, where a number of retailers have been forced to chase business. Even though the festive sales period is over there is speculation that consumers are chasing yet more discounts and promotions. This has the potential to create a vicious circle whereby retailers need to cut costs, consumers chase bargains, retail spending continues to fall and retailers need to cut costs further.

The difference in performance between food and non-food retailers in the UK has never been wider and despite the VAT reduction towards the end of 2008 there has been little relief for non-food retailers.

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