UK retailers experienced the weakest growth in sales last December (2007) though Christmas festival season was on. The trend is likely to continue in 2008 because of slow growth in the country’s economy.

UK retailers had recorded the least sales growth in 2007 during vital Christmas shopping period, according to the Confederation of British Industry’s CBI Distributive Trades Survey, as reported by Telegraph.

The survey showed that out of 146 retail chains that were polled, 42% experienced growth in sales volumes annually in the initial half of December 2007, while 33% said that their sales had declined. Remaining 8% had been weak since November of the previous year. December 2007 was the fourth consecutive month when retail sales declined and disappointed retailers.

According to the industry experts, the beginning and middle of the crucial Christmas shopping period was not good for the retailers. Nevertheless, retailers were expecting good turn out of consumers at the very last moment to take the advantage of promotions and any late discounts.

Chairman of CBI’s Distributive Traders Panel and Asda Director, John Longworth, said, “Maintaining consumer confidence is vital, at a time when the extent to which tighter borrowing and the impact of the credit crunch will bear down on people’s pockets is still not fully known. Consumer spending will certainly slow next year (2008) but the overall economy will stay in reasonable shape”, as per the statement published by Telegraph.

The main causes for such a steep decline in the retails sales are tighter lending practice, slowdown in the growth of personal disposable income, rising debt levels, slowdown in the growth of housing market and rise in the interest rates since August 2006.

According to CBI forecast for January 2008, the UK retailers witnessed difficult trading conditions at the beginning of vital Christmas shopping period. The retailers do not expect too much from consumers as the trend has been started in January 2007.

A Research Analyst at RNCOS said, “The UK retail sales were very disappointing in the first half of December 2007 as compared to the overall retail sales in 2007. The best way to lure the customers is to offer discounts, as customers demand for heavy discounts at festival season. Experts predict that the beginning of 2008 will be disappointing for retailers because this is an after-festival season and consumers become very fussy. The only way to cope with this problem is to catch the attention of consumers from discounts.”

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