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Festive sales rise amid warning of ‘last retail hurrah’

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Online traders saw sales climb to £6.4bn last month as shoppers started their Christmas shopping in earnest and snow hit large parts of the UK, new figures show.

Internet sales in November 2010 rose by 23.4% compared to October and 21.5% compared to last November, according to the latest IMRG Capgemini e-Retail Sales Index.

A prompt start to Christmas shopping was reflected as sales of gifts rose by 123% in November, compared to October. Clothing vendors benefitted as temperatures fell and sales in the clothing, footwear and accessories rose by 35% compared to the same time last year, representing, said IMRG, the strongest growth for 18 months.

Electrical goods appeared to benefit ahead of January’s VAT rise, growing by 44% compared to October and 12% compared to the same time last year.

Chris Webster, head of retail consulting and technology at Capgemini, said: “November has been a very significant month in terms of online retail. Of course the surge in sales can be attributed to the season, but it is indicative of the ongoing trend of consumers migrating online.

“This is a trend which is only set to continue, particularly as consumers use the power of the web to make their ever-diminishing disposable income go further.”

Tina Spooner, director of information at IMRG, said: “November was a very strong month for online retailers with £6.4billion spent online. It has also been a very unique month - the huge rise in shopping combined with one of the heaviest snowfalls in recent years has proved challenging for many online retailers. It will be interesting to see how this will affect consumer confidence and whether it will result in a weaker than expected December.”

Bjorn Kvarby, European managing director of Shopping.com, said: “The unexpected weather conditions in November led to an incredible spike of sales for snow-related clothing and products. Combined with those organised early Christmas shoppers searching for the best bargains, we saw fast growth with more and more consumers deciding to purchase online.

“Despite the hype about the horrible weather affecting online sales at Christmas, we’re confident that Shopping.com will hit its predicted growth of 23%, year-on-year. The general trend has been for a drastic drop-off of sales after 15th December, due to a fundamental trust issue amongst consumers that retailers will fail deliver before Christmas Day. The weather will make little difference to this, but it’s an issue the industry still needs to overcome.”

The figures come as the Centre for Retail Research predicted the January sales would give retailers a last boost before consumers sink into austerity spending for the rest of 2011.

The research, carried out for shopping comparison site Kelkoo, suggests that the UK’s consumers will spend £22.5bn in January.

Of that total, £3.8bn is expected to be spent over the internet. That’s 12%, or £420m more than last year and equates to purchasers spending online 17% of the £370 that each, on average, expects to part with during the sales.

Total UK spending in the sales is expected to account for 25% of the total spent over the whole of the festive season, now forecast to hit £91.2bn. That's 1.3%, or £1.2bn, up on last year’s figures.

But, warns the Kelkoo research, one in two consumers say they will be cutting back on how much they spend throughout 2011. That adds to recent figures from Kelkoo which suggest that 75% of UK shoppers worry that 2011 will be as tough or even tougher in financial terms than 2010.

Chris Simpson, marketing director of Kelkoo, said: “This January sales period could be likened to the calm before the storm for the UK retail industry, as retailers should see an average boost in spending of 1.6% on last year’s figures, but this could be the ‘last hurrah’ before the government’s austerity measures dampen consumer spending intentions in earnest for the coming year.”

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