Online Sales Give A Boost To Shops Clearing Stocks

Online sales increased 11 per cent in May as shoppers took to the web to seek discounts from struggling retailers.

Sales over the internet helped boost retail sales traditional retailers seeking to clear stocks after cold weather dogged the early months of the year, according to the British Retail Consortium. Total retail sales increased 3.4 per cent during the month.

'To some extent retailers had their bacon saved by online sales, underlining the growing importance of the digital channel. Online sales growth helped to counter variable performances on the high street as many chose to take advantage of the same promotional offers from their sofas,' said head of retail at KPMG David McCorquodale. 

He said: 'Consumers remain highly sensitive about price and retailers are increasingly using promotional activity to drive footfall or the online equivalent. Just how much margin is being given away to boost sales is yet to be seen in the retailers' accounts but, on the surface, these promotions seem to be working.' 

Furniture, flooring, childrenswear and electricals - mainly from those seeking an alternative to the collapsed Comet - sold well. Gardening, DIY and fashion sales also began to pick up as the first signs of summer weather broke through.

'The signs are that retailer read conditions well in May and adapted their offer accordingly. Customers are still price-concious but responding well to good deals, especially for big ticket items. But volatile economic conditions mean that this will remain a delicate balancing act for some time to come,' said Helen Dickinson, director general of the BRC. 

The BRC last week kicked off a campaign criticising the tax burden placed on the sector by the Government. The campaign comes against the backdrop of Business Select Committee inquiry into the sector and the state of the high street.

BRC chairman Ian Cheshire claims the tax on retailers has increased by 65 per cent since 2005 driven by an 80 per cent increase in taxes other than corporation tax - such as business rates. The increases have made a pledge by Government to cut corporation tax to 20 per cent by 2015 worthless.

Cheshire, who has held discussions with the treasury alongside Sainsbury's chief executive Justin King, said the tax system has become 'unsustainable' for retailers. 'Ultimately the tax take will have to fall - we need to find a Plan B,' he said.