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Comment on the Office of National Statistics (ONS) Retail Sales figures for November 2009

“The ONS figures today are surprising considering general expectations of rises in sales figures over the past month coupled with innovative strategies being adopted by retailers this Christmas season. The mild and wet weather in November seemed to dampen demand for winter clothing, although retailers of household goods continued to benefit from a growing appetite for big ticket items, ahead of the increase in VAT.  More contemporary survey evidence, suggests that sales have improved in December, although it remains to be seen to what extent the prospect of a rise in VAT on 1st January has displaced demand for big ticket items from future periods.

“Tactical retailing has seen one-off promotional days and  pre-Christmas sales by major retailers, with already reported successes in December. London’s Oxford Street  was closed to support hordes of shoppers, and other retail centres have put on enticing seasonal events. Retailers will be hoping to recover from the set-back of today's figures with strong trading in the final days before Christmas. Whilst consumers may be hoping to snap-up some last minute bargains, with margins and stocks closely managed we are yet to see, and do not expect the exceptional level of discounting seen this time last year.

"Consumer confidence in on-line shopping continues to increase, despite the recent disruption to the postal system.  People seem to be more willing to rely on home delivery when coupled with saving that little extra.  John Lewis Partnership has led the way in diffusing the impact of the VAT increase over the crucial New Year sales period, and is not planning to pass on the additional 2.5 per cent tax to its customers until the end of January. Alongside promoting the traditional post-Christmas discounts, some retailers may wish to follow suit, as they look for innovative discounting strategies  to attract customers through the door in the New Year.”