January retail sales boost for commercial landlords

by Daniel Jones

Commercial landlords could find they are signing more shop lease agreements than expected after retail sales picked up in January. Much to the surprise of many in the sector, retail sales rose 0.9 per cent last month, according to data from the Office for National Statistics (ONS).

It follows a 0.6 per cent rise in trading volumes in December, which similarly took analysts by surprise. "January's strong growth goes against the much more pessimistic picture painted by anecdotal evidence and all of the retail surveys," Samuel Tombs from Capital Economics told the BBC.

Furniture and sports goods performed well, though there was good news coming from across the retail industry.

"All sectors are experiencing some growth when you look year-on-year. In particular the household goods sector has risen from where it was previously, it's ended a long run of contraction," said Kate Davies, head of UK retail at the ONS.

The British Retail Consortium (BRC) welcomed the figures, but said the positive movement is being driven by discounts. Stephen Robertson, director general of the organisation, thinks business rates will need reforming if more landlords are to sign a shop lease.

"Reforming the flawed system for setting business rates ... is key but so is work to simplify planning, expand online opportunities overseas and incentivising investment in new equipment and technology," he explained.

The ONS data also shows that smaller retailers, with nine employees or fewer, appear to be performing better than larger firms.

Falling inflation appears to a be a key factor in boosting consumer confidence. Year-on-year shop price inflation fell to 2.2 per cent last month, the lowest level since November 2009.

Mr Robertson added: "These numbers are slightly better than we would have expected but make it clear that price-cutting by retailers is what's driving any growth in business."


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Published on: February 22, 2012

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