Leisure businesses pick up where retailers fail

19/12/2007

Retail and wholesale industry slumps over the past year are the result of a soggy summer, according to new research.

Over a third of retailers recorded a decline in sales in the third quarter of 2007, according to the Small Business Research Trust (SBRT).

However, the wet weather proved beneficial for the leisure sector with 62% of businesses in the hotel and restaurant sector reporting that sales had risen. The research found that sales growth for the third quarter was, in fact, the highest in the sector for at least three years.

Despite the sales growth in this industry, 54% of business owners said they had not taken on any more staff, and 19% said they had made job cuts.

The damp summer did little for job growth in the retail sector either. Nearly 20% of retailers said they had made job cuts in the third quarter of 2007, compared to only 7% in the previous quarter.

Mark Beresford-Smith, senior economist at HSBC, which sponsored the report, said:

“The strong growth of sales by smaller businesses in the third quarter was achieved against the background of an economy which continued to expand at a healthy rate, in line with the long-term average.

“Although the survey was carried out before the problems surfaced at Northern Rock, it was already abundantly clear that a credit squeeze was underway. This probably explains the downgrading of expectations about future sales growth to a less elevated level than was seen in the first two quarters of this year.”