DECEMBER’S official retail sales figures confirmed that consumers flocked to the high street in the run-up to Christmas, as anyone who ventured into Liverpool One and the surrounding shopping area over the festive period could testify.

Retail sales were up 1.1% over the fourth quarter of 2011 compared to the quarter before.

The increase has occurred because of the hefty discounts being offered which may have encouraged customers to spend more before Christmas, rather than wait for the January sales.

Overall, 2012 looks set to be a tough year for retailers in general.

Tesco’s recent experience, where its seasonal sales performance failed to match the board’s expectations, shows companies should be as flexible as possible in these changing markets in order to stay ahead of the competition.

However, people still need to eat, therefore the Sainsbury’s and Greggs of this world are likely to continue to perform reasonably well – admittedly with lower sales growth.

While, in the past, retailers that sell necessity items such as food have been able to ride out falls in consumer spending, it does seem there is now a shift towards the manner of sales, not just the nature of the items being sold.

Retailers providing a wide variety of products and with a strong internet presence are likely to fare better in 2012.

John Lewis, for example, has shown a decent increase in annual sales growth driven mainly by internet sales.

Equally, ASOS, the online clothing retailer, has also shown how important internet shopping is to a large proportion of the population.

On the other hand, HMV’s 74% share price loss over the past year shows the potential fate of those companies that do not adapt to changing consumer trends.

The IMRG, the trade body for online retailers, confirmed that retail websites enjoyed a buoyant Christmas with sales up 16.5% year-on- year, with more than one in every six pounds now spent online.

Some companies are actually planning to expand in 2012, showing that there is optimism out there.

Asda have announced they are going to create 5,000 new jobs in 2012 as they expand their operations.

Meanwhile, McDonald’s intends to create 2,500 new jobs in the UK this year – will this lead to an increase in sales of gym clothing and trainers in the future?

Retailers are forecasting lower sales and slower growth for the coming year, but, with inflation coming down and the Bank of England potentially increasing Quantitative Easing (money printing) next month, household spending might hold up, in theory.

The fourth-quarter GDP figures released yesterday showed a slight decline of 0.2%.

While we are clearly experiencing a very difficult economic period in general, any exposure to the high street in investment portfolios should concentrate on those companies who have embraced the internet and those with global exposure.

A mixture of both would be ideal.