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Weak January Sales Could Buckle British Retailers

A report from the British Retail Consortium revealed that U.K. retailers had the worst start to a year since 2012. Figures published Tuesday, compiled in conjunction with consultants KPMG, show that the industry experienced a mere 1.6% year-on-year growth in January, compared with a 5.4% climb in 2014, while like-for-like sales inched up 0.2% against a 3.9% growth the previous year.

The latest numbers were driven predominantly by discounts as shoppers took advantage of end-of-season sale campaigns. Helen Dickinson, director general for the British Retail Consortium, said it remains to be seen how clothing sales spurred by seasonal markdowns coinciding with colder weather will affect retailers’ margins — particularly those that offered discounts all the way through from Black Friday at the end of November.

“These figures clearly demonstrate the difficult cycle that retailers are trapped in,” said David McCorquodale, head of retail at KPMG, pointing out that promotion-led environment risks are becoming the new normal. “Demand is now almost solely driven by discounts, with shoppers very reluctant to buy goods at full price in the hope that yet another sale could be just around the corner.”