RETAILERS suffered their worst December in recent history as cut-price deals failed to tempt Christmas shoppers to spend in the faceof 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 theworst performance since the survey began 14 years ago.
It confirmed the dire state of the high street, following poorsales figures from bellwether firms such as Marks & Spencer, whichlast week announced the closure of 27 stores and the loss of 1,200jobs.
More retailers warned of job cuts yesterday. They ranged fromLand of Leather and Findus foods to the Dundee-based delicatessenMcLeish Brothers.
The BRC said the food and footwear sectors had been the only onesto show an annual increase. Sales of clothing, furniture and "bigticket" items such as TVs and fridges slumped, which experts blamedon the housing market collapse.
The BRC said traders had suffered a "double whammy" of fallingsales and falling profit margins as they cut prices in an effort tospark trading.
The only positive news was a 30 per cent jump in internet andmail-order shopping, which was credited to growing customerconfidence in the security of online transactions and guaranteesthat items would arrive before Christmas. However, online purchasesaccount for only 4 per cent of all sales.
Stephen Robertson, the BRC's director-general, said: "These aretruly dreadful numbers. Some retailers were more successful thanothers and the second half of December was better than the first.But, overall, the food sector was almost the only one to showgrowth.
"Non-food retailers had a torrid December, despite a blizzard ofpromotions 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 hadbeen an "expensive failure".
The government had hoped the cut, from 17.5 to 15 per cent,depriving the Treasury of a net GBP 11.1 billion in tax revenues,would persuade shoppers to spend. And Gordon Brown, the PrimeMinister, reiterated yesterday that the 13-month reduction wouldsave an average family around GBP 270 a year.
Meanwhile, in a bleak day for the economy, companies sheddingjobs blamed the freeze in bank lending for a lack of orders.
JCB said it was laying off 700 workers, while 367 people losttheir jobs at the Staffordshire-based china and crystal manufacturerWaterford Wedgwood.
Land of Leather, which had its shares suspended at 3p as it wentinto administration, said its funding efforts had failed due to"exceptionally difficult trading conditions and the lack ofliquidity in the banking system".
The company is debt-free but was unable to secure working capitalto keep it going. The firm, which has 850 staff and 109 stores, saidit had taken "all the necessary steps" to ensure customers who hadpaid deposits for furniture were protected.
McLeish Brothers said seven of its ten stores were to closeimmediately, with the loss of 175 of its 205 jobs, while the Findusfood manufacturer, Newcastle Productions, went into administration,placing 420 jobs at risk
The Prime Minister's spokesman said: "There are half a millionvacancies in the economy. There are approximately 200,000 jobs beingcreated each month. Unfortunately, more people than that are losingtheir jobs. There are still a huge number of jobs being created inthe economy at the moment."
Philip Hammond, shadow chief secretary to the Treasury, said:"Unless we get credit flowing again, more businesses will fail andmore jobs will be lost."
FACTFILE
Food: Basic groceries and ingredients sold well as people cookedat home rather than bought ready meals.
Clothing: Suits and coats sold poorly, but discounted partydresses did well, as did knitwear, hats, scarves and gloves in thecold 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" gamesand Wii preferred to traditional toys.
Home: Fitted kitchens and bathrooms well down on a year ago,because of housing slump.
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