Fears of a triple-dip recession have been raised again after new figures showed marked changes in shopping habits.
A report from the Office for National Statistics has revealed that Brits are abandoning small retailers in favour of large suppliers, and increasingly shopping online.
For January 2013, year-on-year seasonally adjusted estimates of the amount of items bought in the retail sector fell by 0.6%, putting a halt to the year-on-year growth seen in the retail sector since August 2011.
The figures were a surprise to the city, most of whom had expected sales to pick up as shoppers sought out January bargains.
But analysis of the figures showed there was an overall fall in the quantity bought in small stores, in particular those with 0-9 employees, but large stores saw an increase.
We're also buying less food - the overall quantity bought in the food sector was estimated to have fallen 2.6% year-on-year, but the proportion of online food purchases has grown by 27.1%, when compared to sales from January 2012.
The ONS said the icy conditions hit many smaller food shops, with some forced to close as snow blanketed parts of Britain, pushing food sales volumes down 1.6%.
The figures will reignite fears that the UK economy is on course for a triple-dip recession after the first estimate of gross domestic product (GDP) in the final three months of last year showed the economy contracted.
Not everyone was gloomy about the figures however - Richard Lowe, head of retail and wholesale at Barclays, said: "While snow slowed sales on the physical high street, larger retailers were able to stave off falls in footfall with strong virtual traffic as shoppers avoided the bad weather conditions. I expect this trend to continue as retailers feed consumers' growing need for convenience and carry on investing in their online offerings."
And Peter Saville, partner at advisory and restructuring firm Zolfo Cooper said while he expected the uncertainty in the retail sector to continue, good business strategy would help businesses during this difficult period.
"It may have been a turbulent start to the year with household names such as Jessops, HMV and Blockbuster and now Republic entering administration but there is still hope for companies who take matters into their own hands and think about how to best serve the needs of their customers.
"'E-tail' may be one of the most popular buzzwords of the New Year, but retailers shouldn't necessarily rush to close stores. Store closures can have a massive impact on customers – especially those who prefer to shop in-store – and companies need to protect these revenues, rather than simply hand them to a competitor."
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