Food bucks the trend of poor retail sales

UK retail sales last December were the worst in over a decade, according to latest figures from the British Retail Consortium.

But while like-for-like retail sales were down 3.3% on December 2007, the food and drink sector was one of the few categories to show an increase, the figures revealed.

“Shoppers continued to enjoy their traditional Christmas dinners in 2008, maintaining spending on food and drink,” Joanne Denney-Finch, IGD chief executive said. “Indeed, many food and grocery retailers have been reporting very healthy sales in the days running up to Christmas.”

Tesco was one of those. Today (13 January) it announced “record sales over the Christmas and New Year period”, with group sales up by 11.6% during the seven weeks to 10 January 2009, driven by continued international expansion and steady growth in the UK.

In the UK, like-for-like sales (excluding petrol) increased by 2.5%, with online sales performing particularly strongly. Total sales were up over 18% to £273m in the seven-week period.

Ms Denney-Finch said that, overall, December’s grocery sales had remained robust, but grew more slowly than the previous month. Growth was the slowest since last March.

The, albeit small, growth could be due to retailers promoting heavily during the last week of November to encourage people to make Christmas purchases early, she said. “Food inflation also started to ease during the final part of 2008.”

There were indications that consumers had shifted to basic groceries and ingredients as people saved money by cooking from scratch rather than buying ready meals. The very cold weather also drove sales for meat and vegetables, soups and puddings.


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