Sunday Trading laws unlikely to be changed after sales slump

Retail sales fell in August during the period that Sunday trading laws were relaxed to allow for flexibility during the Olympics.

Shoppers stayed away from the stores and there was also a decline in online sales as the public watched the sporting action from the Olympics instead.

Analysts say that the relatively muted sales during extended Sunday opening hours mean a change in the trading laws is unlikely as it failed to boost retailers.

The new rules during the Olympics allowed traders to stay open for longer than the six hours between 10am and 4pm under the existing Sunday trading laws.

Retailers have different views on Sunday opening hours. Sainsbury's boss, Justin King is against it and rival supermarket Tesco has also come out against extending Sunday opening hours.

However, Sir Philip Green, owner of Top Shop and other stores said that he thinks it would be good to extend opening hours in December, in the run up to Christmas.

The argument comes as data published by the British Retail Consortium (BRC) shows that in the four years since the collapse of Lehman Brothers that marked the beginning of the credit crunch, UK retail growth has halved.

Its report said: "The impact of the global financial crisis on UK retailers has been severe, long-lasting and continues to be felt."

Sales volumes fell by 0.2 per cent in August, contributing to an annual rise of 2.7 per cent, according to official figures from the Office for National Statistics (ONS).

The monthly drop in sales was less than analysts expected with the median prediction being of a 0.4 per cent monthly drop. If petrol sales are excluded from the figures the monthly drop was 0.3 per cent.

Big-ticket household purchases suffered with household goods shop sales down 2.7 per cent in the month. But the biggest and most surprising fall was the 6.7 per cent monthly drop in online sales as shoppers chose to watch the Olympics rather than surf the net and make impulse purchases.

However, the drop in sales sounds the death knell to the view that the Olympics would provide a short-term boost to the economy.

It provided a short-term boost to jobs and the fact that the ticket sales (that were bought some time ago) will be accounted for in the third quarter may help GDP, but the London Olympic Games were so compelling they stopped people going out shopping.

Anecdotal evidence showed that the warning of travel disruption in London during the Olympics discouraged shoppers and also workers from travelling into the capital with a subsequent negative impact on trade.

They even stopped people staying in and shopping according to the ONS data. Online sales figures had their worst monthly performance for more than five years as people tuned into the sporting action rather than go shopping online.

Online sales fell by 6.7 per cent compared to July – the biggest monthly decline since December 2007.

Commentary from the ONS said: "Feedback from online retailers suggests that sales were lower as consumers watched the Olympics instead of shopping online.”

However, there was a boost to sales from the overall impact of the sporting summer with retailers reporting a rise in sales of sports equipment, football shirts and other sporting goods.

On a quarterly basis retail sales rose by 0.6 per cent between June and August compared to the previous three months.

UK consumers have faced the worst squeeze on disposable income since the great depression of the 1930’s as inflation has outpaced wage increases for the last three years, energy prices have increased by 60 per cent in the last five years and petrol prices have hit a new record high.

According to Howard Archer, from IHS Global Insight. the squeeze is unlikely to ease.  He said: Hopes that the squeeze on consumers’ purchasing power would ease markedly further over the latter months of 2012 are waning.

"In particular, a move back up in petrol prices, rising utility bills and the possibility of higher food prices (partly due to the drought in the US) will limit any further falls in consumer price inflation in the near term and could even see it move back up.”