business

Retail Sales Fall Amid Weak Confidence And Budget Concerns

CBI Distributive Trades Survey

Image by AI ARTIST KING from Pixabay

Retail sales volumes continued to decline at a strong rate in the year to October, extending the sector’s downturn into a thirteenth consecutive month - according to the latest CBI Distributive Trades Survey.

Next month, the outlook for the retail sector remains gloomy, with retailers expecting sales volumes to fall at a faster pace.

Key findings included:
Retail sales volumes continued to decline at a strong rate in the year to October (weighted balance of -27% from -29% in September). Sales are expected to fall at a faster pace in November (-39%).
Sales for the time of year were judged to be “poor” in October, to a comparable extent to last month (-15% from -13% in September). Next month’s sales are set to remain similarly below seasonal norms (-17%).
Online retail sales volumes grew slightly in the year to October (+4% from -24% in September) but are expected to contract at a modest pace next month (-8%).
Wholesale sales volumes fell at a fast rate in the year to October (-31% from -30% in September). Wholesalers expect sales to decline at a slightly quicker pace next month (-35%).
Total distribution sales volumes (including retail, wholesale, and motor trades) continued to fall at a firm rate in the year to October (-30% from -35%). Firms expect the pace of decline to quicken next month (-37%).

The retail sector remains in a prolonged downturn, with October marking the thirteenth consecutive month of falling annual sales volumes. Firms reported that consumer confidence remains poor, compounded by elevated caution ahead of next month’s Autumn Budget. Weak demand conditions were also reflected in further sales declines across wholesaling and motor trades.

Persistent uncertainty ahead of the Autumn Budget is deepening the strain on retailers and other distribution firms that are still grappling with the effects of last year’s fiscal decisions. To help rebuild confidence and encourage growth, the Chancellor should reaffirm her commitment to no further business tax hikes in November. Additionally, the government should rethink the Employment Rights Bill to ensure that it does not put undue constraints on flexible working, which could particularly impact young people who often look to retail for their first jobs.

Martin Sartorius, Principal Economist, CBI

In addition, data from the survey showed:
Retail orders placed upon suppliers declined at a firm pace in the year to October (-28% from -36% in September). Retailers expect to cut back on order volumes at a faster rate in November (-42%).
Retail stock volumes relative to expected sales softened in October (+14% from +24% in September; long-run average of +17%) and are expected to broadly hold at this position next month (+16%).
Motor trade sales volumes contracted at a markedly slower pace compared to last month (-29% from -67% in September). Sales are expected to fall at a stronger rate in November (-38%).