In a nuanced landscape, UK retailers grapple with both optimism and hurdles, as outlined in the latest report from the CBI Distributive Trades Survey. While specifics on sales figures are absent, the report acts as an early indicator of trends and sentiment in the retail sector.
Key findings indicate a seventh consecutive monthly decline in retail sales volumes year-on-year for November. Despite a modest uptick in sentiment, businesses are bracing for a further dip in sales come December.
The retail sector witnessed a reduction in workforce over the year to November, hinting at potential employment challenges. Furthermore, the outlook for investment in the coming year appears to be on a downward trajectory. Although inflation shows signs of abating, price pressures within the sector are poised to persist.
In detailed analysis, the survey points to a slower decline in retail sales volumes in November, with a ‘weighted balance’ of -11%, compared to October’s -36%. This metric gauges the percentage of retailers experiencing a sales decline versus those that did not.
Looking forward, retailers anticipate a more gradual decline in sales volumes next month (-6%). November sales fell below seasonal norms (-16% from October’s -10%), with a similar expectation for December (-15%).
Despite an overall cautious approach, there is a bright spot for some retailers. +4% expect a slight improvement in their business situation over the next three months, marking a significant upswing from the -14% reported one quarter ago in August.
On the investment front, retailers foresee a reduction over the next 12 months, albeit to a lesser extent than in August (-11% from -25%). Inflation remains a concern, with retail selling prices rising rapidly in the year to November (+73%). Prices are expected to maintain a similar growth rate next month (+72%).
Retailers report that stock positions remain «too high,» despite softening in November (+13% from October’s +27%). Internet sales volumes, while still declining, moderated compared to the previous month’s record rate of decrease (-39% from October’s -78%). Online sales are anticipated to fall at a similar pace next month (-42%).
Martin Sartorius, CBI Principal Economist, commented, “Retailers had hoped the Chancellor’s Autumn Statement would offer a reprieve from next year’s hike in business rates. While prioritizing relief for SMEs and key sectors is understandable, many retailers are being left to contend with another increase in costs at a time when they are least able to afford them.
