The UK retail landscape confronts a deepening downturn, as indicated by the latest report from the Confederation of British Industry (CBI). Entitled «Retail downturn deepens as festive period disappoints,» the report emphasizes a weighted percentage approach to retailers’ sales insights.
December witnessed a swift and significant decline in retail sales volumes, marking the eighth consecutive month of year-on-year declines. As retailers assess the aftermath of the crucial holiday trading period, a gloomy outlook prevails for the New Year, with expectations of an even sharper contraction in sales.
The weighted balance, representing the percentage of retailers reporting a downturn in sales volumes, plummeted to -32%, a substantial drop compared to November’s -11%. Peering into January, retailers anticipate a further dip, with expectations for declining sales volumes at -41%.
In December, sales volumes dipped below the seasonal average, intensifying the downturn compared to the previous month. Retailers responded by curbing orders with suppliers at the fastest rate since May 2020, although a slight softening is expected in the coming month.
Retailers also identified stock volumes as «too high» relative to expected sales in December, with a similar expectation for January.
The online retail sphere experienced a firm decline in sales volumes this month, with a continuation of the trend expected in January.
Martin Sartorius, CBI Principal Economist, observed, “The retail sector concluded 2023 on a glum note, with the ongoing downturn in sales volumes deepening during the crucial holiday trading period. Looking ahead, retailers are bracing themselves for a New Year’s chill, as sales are set to fall at an even quicker pace next month.»
“Strained household finances and higher interest rates continue to impact consumer spending, indicating that retailers must navigate a challenging demand environment in the months ahead. In this context, an anticipated hike in business rates and the National Living Wage will add further pressure to the sector in the New Year.
