The British Retail Consortium (BRC) has reported a 0.3% decline in UK retail sales last month, compared to 2011, making it the second-worst January since the survey began 17 years ago.

Compared on a like-for-like basis to January 2011, when sales grew 2.3%, the bleak results come at the same time that the Local Data Company has announced the number of empty shops on UK high streets is set to rise this year, with a total of 48,000 shops (14.8%) standing vacant in 2011.

Stephen Robertson, director general of the BRC, said: “As 2012 gets under way, it’s clear people don’t feel any better about the immediate future than they did 12 months ago. Customers parked their worries in December and spent, encouraged by discounts. Now, in the New Year, reality has bitten again as concerns about jobs, wages and household costs reassert themselves.

“Food sales grew faster than non-food, but the gap was much narrower than in December as people cut back and searched out grocery offers and value lines. In 2011, overall like-for-like growth averaged virtually zero and that was with a boost to top-line figures from inflation, including the higher VAT rate, which won’t continue in 2012. Against that background, government must hold down the costs it’s responsible for.”

Helen Dickinson, head of retail at UK professional services provider KPMG, said: “After a stronger-than-expected December, these latest figures are rather sobering. The return to negative like-for-like sales reflects the trend seen throughout most of 2011 and is a stark reminder of the challenges facing retailers.

“Both food and non-food had a slow start to the month. In the first week of January, customers were still using up stocks of food bought in for Christmas. But the underlying health of the sector remains a key concern, with margins and profits squeezed by the relentless need to discount to generate demand. Many retailers are rethinking their entire business models in a desperate attempt to adapt to this low growth environment and pricing remains more strategic than ever before.”

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