Retail sales in London hit an five-year low in January 2010 and rose only 3.5% compare with a 6.5% increase in December, according to the latest report from the British Retail Consortium. This was due mainly to the bad weather and less discounting than the previous year, which meant that fewer people made shopping trips. Conversely, those who managed to make the sales spend more cash than in January 2009.

The weakening of Euro and strengthening of the pound in January also made the UK a less attractive shopping destination than before for European tourists.

Despite these set-backs, certain product categories such as beauty products sold well. Sales of essentials such as food were also up, whilst non-essentials such as homeware struggled unless in the clearance and clothes, footwear and accessories were also dependent upon the weather.

BRC director general Stephen Robertson told Retail Week: “Customers are becoming cautious again about spending when they don’t have to, but London retail sales are still showing real terms growth and significantly outperforming the rest of the UK. The capital’s retailers will be hoping these results are mainly due to bad weather, rather than any long-term return to concerns about personal finances, keeping consumers away from shops.” 

It seems that the US is suffering from similar problems when it comes to retail sales. Total retail sales were up by 0.5% in January but this is still not enough to fuel a recovery. According to a report in The Times, "US shoppers concentrated their spending on big general retailers such as WalMart, as well as sports goods stores, internet retailers, restaurants and bars."

Paul Ashworth, senior US economist at Capital Economics, told the Times: “We expect lingering high unemployment, weak income growth, low confidence, tight credit conditions and the continuing need to deleverage will constrain consumption growth for at least this year and possibly well beyond.”

“Without an acceleration in consumption growth the economic recovery is likely to falter in the second half of the year.”