RETAILERS suffered their worst December in recent history as cut-price deals failed to tempt Christmas shoppers to spend in the face of the credit crunch.
The latest British Retail Consortium (BRC) survey revealed like-for-like sales were down 3.3 per cent on a year ago. This was the worst performance since the survey began 14 years ago.
It confirmed the dire state of the high street, following
poor sales figures from bellwether firms such as Marks & Spencer, which last week announced the closure of 27 stores and the loss of 1,200 jobs.
More retailers warned of job cuts yesterday. They ranged from Land of Leather and Findus foods to the Dundee-based delicatessen McLeish Brothers.
The BRC said the food and footwear sectors had been the only ones to show an annual increase. Sales of clothing, furniture and "big ticket" items such as TVs and fridges slumped, which experts blamed on the housing market collapse.
The BRC said traders had suffered a "double whammy" of falling sales and falling profit margins as they cut prices in an effort to spark trading.
The only positive news was a 30 per cent jump in internet and mail-order shopping, which was credited to growing customer confidence in the security of online transactions and guarantees that items would arrive before Christmas. However, online purchases account for only 4 per cent of all sales.
Stephen Robertson, the BRC's director-general, said: "These are truly dreadful numbers. Some retailers were more successful than others and the second half of December was better than the first. But, overall, the food sector was almost the only one to show growth.
"Non-food retailers had a torrid December, despite a blizzard of promotions and deals, which would have hit margins.
"Many hard-pressed customers couldn't be seduced into spending."
The Tories said the BRC survey proved the reduction in VAT had been an "expensive failure".
The government had hoped the cut, from 17.5 to 15 per cent, depriving the Treasury of a net £11.1 billion in tax revenues, would persuade shoppers to spend. And Gordon Brown, the Prime Minister, reiterated yesterday that the 13-month reduction would save an average family around £270 a year.
Meanwhile, in a bleak day for the economy, companies shedding jobs blamed the freeze in bank lending for a lack of orders.
JCB said it was laying off 700 workers, while 367 people lost their jobs at the Staffordshire-based china and crystal manufacturer Waterford Wedgwood.
Land of Leather, which had its shares suspended at 3p as it went into administration, said its funding efforts had failed due to "exceptionally difficult trading conditions and the lack of liquidity in the banking system".
The company is debt-free but was unable to secure working capital to keep it going. The firm, which has 850 staff and 109 stores, said it had taken "all the necessary steps" to ensure customers who had paid deposits for furniture were protected.
McLeish Brothers said seven of its ten stores were to close immediately, with the loss of 175 of its 205 jobs, while the Findus food manufacturer, Newcastle Productions, went into administration, placing 420 jobs at risk
The Prime Minister's spokesman said: "There are half a million vacancies in the economy. There are approximately 200,000 jobs being created each month. Unfortunately, more people than that are losing their jobs. There are still a huge number of jobs being created in the economy at the moment."
Philip Hammond, shadow chief secretary to the Treasury, said: "Unless we get credit flowing again, more businesses will fail and more jobs will be lost."
FACTFILE
Food: Basic groceries and ingredients sold well as people cooked at home rather than bought ready meals.
Clothing: Suits and coats sold poorly, but discounted party dresses did well, as did knitwear, hats, scarves and gloves in the cold weather.
Electrical: TV and audio sales were driven by clearance sales. Digital cameras, satnav and beauty electricals also did well.
Leisure: Computer games sold well, with "brain-training" games and Wii preferred to traditional toys.
Home: Fitted kitchens and bathrooms well down on a year ago, because of housing slump.
