Retail sector shrinks as consumers spend less

The number of retail outlets decreased by 0.5 per cent in the second quarter of 2012 compared with the same period last year, the first fall since the British Retail Consortium-Bond Pearce Retail Employment Monitor (REM) began in October 2008.

The BRC said the decrease marked a significant shift from consistent annual growth since collecting the data began, with the underlying trend showing a weakness in store openings over the last 12 months.

The fewer stores are “indicative of the challenges facing high streets” with vacancy rates at historically high levels, it said.

However, retail employment, or total hours worked, in the second quarter of 2012 rose by 1.8 per cent compared with the same quarter in 2011, the equivalent of 12,648 more full-time jobs, according to the BRC’s sample.

The increase was driven entirely by food retailers, with the fastest growth from part-time workers. Fewer hours were worked in non-food retailing.

The proportion of retailers suggesting that they will shed staff over the next quarter has fallen to just 4 per cent compared with 25 per cent for the same period last year.

BRC director general Stephen Robertson said: “Retail as a whole is still where much-needed new jobs are coming from but, within that, it’s food retailing that’s providing more work.

“Big events like the Jubilee celebrations provided a limited boost to employment levels but underlying weakness in the economy and consumer confidence continue to hit sales and job numbers in non-food retailing.

“Supermarkets, continuing to open smaller-format stores, are masking the potential of a much sharper decline.

He added: “Without them, total shop numbers would have fallen further.