The UK retail sector faces difficult 2011, as the big freeze and belt-tightening hit non-food sales in December

The UK retail sector faces difficult 2011, as the big freeze and belt-tightening hit non-food sales in December

KPMG is warning that retailers are facing a difficult year ahead – after Christmas shopping was hit by a combination of tough economic conditions and sub-zero temperatures.

Helen Dickinson and Tim Clifford, retail partners at KPMG, said: "There's no doubt that non-food trading in the four weeks to Christmas saw a drop in like-for-like sales, with many retailers having a difficult time. Many people struggled to get to the shops because of the snow - those that did had less money to spend than in previous years.”

E-commerce provides growth

But the consultants said there were some bright spots. “Online sales continued to grow despite the difficult weather conditions, but many pre-Christmas delivery slots appear to have been missed,” they added. “Those retailers with the right online offer – along with out-of-town destination shopping centres that have better road access – have done comparatively better.”

They also predicted that post-Christmas sales would now be crucial to December's results. “But with few panic price reductions and little more than the expected amount of discounting, it's likely that the sales season will quickly run out of steam,” they said. “Many retailers have been carefully managing their stock positions to protect their margins where possible, in the expectation that Christmas 2010 would not be a blockbuster, irrespective of the weather.

"The industry knows it is in for a tough year ahead,” they concluded. “As well as the VAT rise, customers are tightening their belts because they're worried about prospects for their own jobs and personal finances in what are likely to be tougher economic conditions in 2011.”