Heavy discounting by clothing and footwear stores in the run-up to Christmas contributed to a 0.6% rise in UK retail sales volume in December, according to official retail figures released today (20 January).

The data from the Office for National Statistics (ONS) compared with a revised drop of 0.5% in November, and was 2.6% higher than the previous December. Year-on-year sales values were up 6.2%.

Sales volumes at textile, clothing and footwear stores increased 6.3% from December 2010, when demand was impacted by harsh winter weather. By value, sales in the sector were 8.2% higher.

Today's statistics reflect findings earlier this month by the British Retail Consortium (BRC), which showed a late rush to the shops at the end of the month driven by extensive discounting.

"December did provide a small boost for the retail sector," said BRC public affairs director, Jane Bevis. "After a difficult year some shoppers relaxed their tight hold on their finances and allowed themselves to splash out on gifts and festive food and drink, aided by deep discounting.

"However these figures are being compared with a poor, snow-hit December the previous year and the fundamental conditions which are making business difficult for retailers haven't changed.

"Underlying factors including low consumer confidence and falls in real disposable income mean shoppers remain reluctant to spend and are only encouraged by significant discounting. Retailers are competing hard on price and their margins are feeling the effects. For some, these difficult trading conditions have led to business failure. "

Richard Hyman, strategic retail adviser to Deloitte, agrees that "whilst there were some excellent performances this Christmas, these were at least evened out by the lack of growth at some of the country's largest retailers.

"Once you take VAT and last year's heavy snowfalls into account, the net effect is that Christmas was probably flat at best."

Looking at the year ahead, he believes the industry is in for a "tough" 12 months.

"Spending is flat but capacity keeps growing. There is too much space and whilst demand for prime retail sites will remain strong, overall retail space must fall and is likely to do so at a faster rate than we have seen so far.

"The challenge for retailers will be to resist doing this opportunistically as leases come up for renewal, but to do so strategically, maintaining a core portfolio of profitable stores."

The difficult underlying trading conditions are already reflected in a flurry of retail failures in the first few weeks of 2012.

Yesterday (19 January) administrators in UK value clothing retailer Peacocks axed 249 head office staff while they seek a buyer for the business.