business

Retailers Report Marginal Sales Growth As Online Sales Rise

Image by wendy julianto from Pixabay

Retailers reported marginal growth in sales volumes in the year to September, following a three-month-long downturn. That’s according to the latest CBI Distributive Trades Survey.

Firms in the retail sector anticipate annual sales to continue growing next month, at a broadly similar pace.

Key findings included:

Retail sales volumes grew marginally in the year to September, following a three-month-long downturn (weighted balance of +4% from -27% in August). Retailers expect sales to grow in October at a broadly similar pace (+5%).

Internet sales volumes bounced back in the year to September at the fastest rate since June 2023 (+18% from -15% in August). Online sales are expected to grow at an even quicker pace in October (+35%).

Nonetheless, retailers reported disappointing sales for the time of year (-11% from -21% in August). Sales are expected to remain similarly weak by seasonal standards next month (-10%).

Retail orders placed upon suppliers declined at a moderate rate in the year to September, following a rapid fall last month (-14% from -42% in August). Retailers expect to cut back on orders at a slightly slower pace next month (-10%).

The total distribution sector (includes retail, wholesale, and motor trades) recorded a mild contraction in year-on-year sales volumes this month (-8% from -20% in August), with a similar decline expected in October (-7%).

After a challenging summer, retailers will welcome the modest growth in annual sales volumes this month. While some firms within the retail sector are beginning to see tailwinds from rising household incomes, others report that consumer spending habits are still being affected by the increase in prices over the last few years.

In contrast to the recovery seen in the retail sector, wholesalers and motor traders continue to see a decline in sales volumes, with businesses reporting concerns about a slow and uncertain market.

Retailers, alongside a host of other important sectors, are keen to see the government take long overdue action to address an antiquated business rates system that has become too complex, too unpredictable, and is, ultimately, unfair on many firms.

Martin Sartorius, Principal Economist, CBI

In addition, data from the survey showed:

Retailers reported that stock volumes were “too high” in relation to expected demand in the year to September (+19% from +14% in August). Stock positions are set to remain similarly elevated next month (+20%).

Wholesale sales volumes in the year to September fell at a similarly modest pace to last month (-8% from -7% in August) and are expected to decline at a broadly unchanged rate in October (-6%).

Motor trades sales volumes reported a fast decline in annual sales, though at a somewhat slower pace compared to the sharp drop in August (-43% from -57% in August). Sales are expected to fall at a broadly similar rate next month (-42%).