The UK business press had been even more optimistic about recovery that its US counterpart, so the less than cheery news about retail sales in London is a blow to the view that the worst was indeed past.
One of the reasons shopping had held up so well to date was the English capital’s role as a mecca for foreign shoppers, particularly given the fall in the pound. Its rally has served to expose the weakness of domestic demand. Now admittedly there are some specific factors that make this report look worse than it might otherwise, such as Ramadan falling in August this year, which curtailed visits from the Middle East.
From the Independent:
London’s retailers will today create shockwaves by posting their worst monthly sales for four years, ahead of results this week from some of the UK’s biggest store groups that will provide a health check for the high street leading up to the critical Christmas trading period….
The British Retail Consortium said that like-for-like retail sales in Central London plummeted by 5.9 per cent in August – the first month they have fallen this year after seven months of growth, which has hitherto been partly supported by foreign shoppers taking advantage of the weak pound. Retail sales fell by 0.1 per cent outside of the capital, which was the first time they had been ahead of London’s this year, although the gap had previously been narrowing…
Stephen Robertson, the director general of the BRC, said: “These results don’t suggest the recovery is underway. This is the lowest London sales growth since August 2005.” He added: “Central London footfall saw the biggest drop for over a year and a half. The pound is less weak that it was, eroding London’s appeal for overseas visitors. Like domestic shoppers, tourists are also more cautious.”