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Retailers suffered a “lacklustre” January as bad weather and cost of living pressures discouraged shoppers from opening their wallets after Christmas, according to new research.

Total retail sales across the UK increased by only 1.2% year-on-year in January – down sharply from growth of 4.2% during the same period last year, figures from the British Retail Consortium (BRC) and KPMG said.

Separate figures from Barclaycard also found year-on-year consumer card spending grew by just 3.1% over the same month.

It blamed the recent cold weather – including from Storm Isha and Storm Jocelyn – for putting off shoppers from visiting high streets, and claimed Britons were instead “embracing nights in” by watching TV hits such as The Traitors.

The BRC said January sales discounting helped boost spending in the first two weeks of the post-Christmas period, but added the trend was “not sustain[ed] throughout the month”.

Chief executive Helen Dickinson said: “Larger purchases, such as furniture, household appliances, and electricals, remained weak as the higher cost of living continued into its third year.”

Clothing and footwear sales also performed poorly, although there was an upward trend for health and beauty products, she added.

Linda Ellett, KPMG’s UK head of consumer markets, leisure and retail, described the high street’s performance as “lacklustre” and said the “feel-good factor” from falling mortgage rates and easing inflation had yet to materialise at the tills.

She said: “It may be a new year, but the hangover of low consumer confidence remains.

“The extraordinary weather conditions across large parts of the country did little to encourage shoppers out on to the high street, whilst continued industrial action on the rail network was unhelpful for city centre locations.”

It comes after official figures showed a shock fall in retail sales during the key December shopping period, despite some positive reports by major high street outfits in the run-up to Christmas.

Shelter from the storms

Barclaycard said its below-inflation growth figures suggested “Brits stayed at home to shelter from the cold weather and save money after a busy festive period”.

It said spending on takeaways and fast food was up 5.5% year-on-year in January, with people spending £55 each on average, while household expenses on digital content and subscriptions increased by 11.4%.

Nearly half of 2,000 consumers polled on behalf of Barclaycard said they were using loyalty schemes or vouchers to get money off shopping, while 43% said they plan to cut down on non-essential spending due to rising bills.

But the poll also found 70% have confidence in their household finances – the highest level in its monthly survey since November 2021.

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Karen Johnson, head of retail at Barclays, said: “Brits took on a more frugal approach in January, choosing to stay at home more often to save money and shelter from the winter weather.

“This meant that online retail performed strongly, as shoppers browsed the sales from the comfort of their sofas, while demand for digital content and takeaways remained robust, boosted by the release of popular new film and TV releases such as The Traitors and Fool Me Once.

“While this shift in behaviour resulted in subdued growth for hospitality and leisure, it’s encouraging that confidence is improving, with consumers remaining resilient and finding savvy ways to manage their finances.”

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Jack Meaning, chief UK economist at Barclays, added: “Increasing consumer confidence is a positive message for the UK outlook in 2024, as we see inflation continue to fall, real incomes rising and growing signs that interest rate cuts are coming.

“Spending looks to be on an upward trajectory”.

Looming election

The figures came as the BRC’s Ms Dickinson said she hoped the “next government” could improve the outlook for businesses.

Opinion polls suggest the Labour Party is on course to win the next general election, which many commentators expect will be held this autumn.

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Ms Dickinson said: “With the spring budget in sight, and a general election looming, government cannot afford to ignore the needs of retailers and their customers.

“Employing three million people and supporting families and communities in every corner of the country, retail is the ‘everywhere economy’.

“By addressing the cumulative burdens, from business rates’ rises, to ill-conceived new recycling proposals to border control costs, the next government can unlock retail investment and boost local and national economic growth.”

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M&S tells agency workers to stay at home after cyberattack

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M&S tells agency workers to stay at home after cyberattack

Marks & Spencer (M&S) has ordered hundreds of agency workers at its main distribution centre to stay at home as it grapples with the unfolding impact of a cyberattack on Britain’s best-known retailer.

Sky News has learnt that roughly 200 people who had been due to undertake shift work at M&S’s vast Castle Donington clothing and homewares logistics centre in the East Midlands have been told not to come in amid the escalating crisis.

Agency staff make up about 20% of Castle Donington’s workforce, according to a source close to M&S.

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The retailer’s own employees who work at the site have been told to come in as usual, the source added.

“There is work for them to do,” they said.

M&S disclosed last week that it was suspending online orders as a result of the cyberattack, but has provided few other details about the nature and extent of the incident.

In its latest update to investors, the company said on Friday that its product range was “available to browse online, and our stores remain open and ready to welcome and serve customers”.

“We continue to manage the incident proactively and the M&S team – supported by leading experts – is working extremely hard to restore online operations and continue to serve customers well,” it added.

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It was unclear on Monday how long the disruption to M&S’s e-commerce operations would last, although retail executives said the cyberattack was “extensive” and that it could take the company some time to fully resolve its impact.

Shares in M&S slid a further 2.4% on Monday morning, following a sharp fall last week, as investors reacted to the absence of positive news about the incident.

M&S declined to comment further.

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Deliveroo shares surge 17% as £2.7bn takeover looms

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Deliveroo shares surge 17% as £2.7bn takeover looms

Shares in meal delivery platform Deliveroo have surged by 17% as investors react to news of a £2.7bn takeover proposal.

The company revealed after the market had closed on Friday that it had been in talks since 5 April with US rival DoorDash.

Deliveroo suggested then it was likely the 180p per share offer would be recommended, though full terms were yet to be agreed.

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At that price, the company’s founder and chief executive, Will Shu, would be in line for a windfall of more than £170m.

Deliveroo further announced, before trading on Monday, that it had suspended its £100m share buyback programme.

The opening share price reaction took the value to 171p per share – still shy of the 180p on the table – and well under the 390p per share flotation price seen in 2021.

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Deliveroo’s shares have weakened nearly 50% since their market debut.

The deal is not expected to face regulatory hurdles as it provides DoorDash access to 10 new markets where it currently has no presence.

But a takeover would likely represent a blow to the City of London given the anticipated loss of a tech-focused player.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “If the deal is done at that price, the company will fail to shake off the ‘Floperoo’ tag it was saddled with after its disastrous IPO debut in 2021.

“Even though Deliveroo has finally broken through into profitable territory, the prolonged bout of indigestion around its share price has continued.

“The surge in demand for home deliveries during the pandemic waned just as competition heated up. Deliveroo’s foray into grocery deliveries has helped it turn a profit but it’s still facing fierce rivals.”

She added: “The DoorDash Deliveroo deal will be unappetising for the government which has been trying to boost the number of tech companies listed in London.

“If Deliveroo is purchased it would join a stream of companies leaving the London Stock Exchange, with too few IPOs [initial public offerings] in the pipeline to make up the numbers.”

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US trade deal ‘possible’ but not ‘certain’, says senior minister

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US trade deal 'possible' but not 'certain', says senior minister

A trade deal with the US is “possible” but not “certain”, a senior minister has said as he struck a cautious tone about negotiations with the White House.

Pat McFadden, the Chancellor of the Duchy of Lancaster, told Sunday Morning with Trevor Phillips there was “a serious level of engagement going on at high levels” to secure a UK-US trade deal.

However, Mr McFadden, a key ally of Sir Keir Starmer, struck a more cautious tone than Chancellor Rachel Reeves on the prospect of a US trade deal, saying: “I think an agreement is possible – I don’t think it’s certain, and I don’t want to say it’s certain, but I think it’s possible.”

He went on to say the government wanted an “agreement in the UK’s interests” and not a “hasty deal”, amid fears from critics that Number 10 could acquiesce a deal that lowers food standards, for example, or changes certain taxes in a bid to persuade Donald Trump to lower some of the tariffs that have been placed on British goods.

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And asked about the timing of the deal – following recent reports an agreement was imminent – Mr McFadden said: “We’ll keep working with the United States and keep trying to get to an agreement in the coming weeks.”

As well as talks with the US, the UK has also ramped up its efforts with the EU, with suggestions it could include a new EU youth mobility scheme that would allow under-30s from the bloc to live, work and study in the UK and vice versa.

Mr McFadden said he believed the government could “improve upon” the Brexit deal struck by Boris Johnson, saying it had caused “an awful lot of bureaucracy and costs here in the UK”.

He said “first and foremost” on the government’s agenda was securing a food and agriculture and a veterinary agreement, saying it was “such an important area for the UK and an area where we’ve had so much extra cost and bureaucracy because of Brexit”.

He added: “But again, as with the United States, there’s no point in calling the game before it’s done. We’ve still got work to do, and we’re doing that work with our partners in the EU.”

The Cabinet Office minister also rejected suggestions the UK would have to choose between pursuing a trade deal with the US and one with the EU – the latter of which has banned chlorinated chicken in its markets – as has the UK – but which the US has historically wanted.

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On the issue of chlorinated chicken, Mr McFadden said the government had “made clear we will not water down animal welfare standards with either party”.

“But I don’t agree that it’s some fundamental choice beyond where we have to pick one trading partner rather than another. I think that’s to misunderstand the nature of the UK economy, and I don’t think would be in our interests to put all our eggs in one basket.”

Also speaking to Trevor Phillips was Tory leader Kemi Badenoch, who said the government should be close to closing the deal with the US “because we got very close last time President Trump was in office”.

She also insisted food standards should not be watered down in order to get a deal, saying she did not reach an agreement with Canada when she was in government for that reason.

“What Labour needs to do now is show that they can get a deal that isn’t making concessions, so we can have what we had last month before the trade tariffs, and we need serious people doing this,” she said.

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