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CBI: Retail sales fall, but growth expected to return next month

Retail sales volumes fell in the year to September following last month’s increase according to the latest CBI monthly Distributive Trades Survey.

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The survey of 120 firms, of which 63 were retailers, showed that the volume of sales fell, despite expectations last month that sales would be largely unchanged. However, sales volumes look set to grow slightly in the year to October.

Overall, sales volumes for the time of year were considered to be above seasonal norms.

The volume of orders placed upon suppliers fell for a sixth consecutive month, disappointing expectations of a rebound in order growth.

Within the retail sector, lower sales at grocers, specialist food & drink and footwear & leather were the main drivers of the drop in overall volumes. Meanwhile, strong growth was recorded in clothing, hardware & DIY.

Growth in internet sales volumes slowed further in the year to September, although growth is set to pick up in October.

Rain Newton-Smith, CBI Chief Economist, said:

“September is normally an important month for retailers and it’s encouraging to see that sales of clothing, DIY goods and hardware are above seasonal norms.

“However, consumer confidence has been dented since earlier in 2016 and higher inflation is likely to squeeze household incomes over the year ahead. With margins remaining tight, retailers are set to continue to operate in a fiercely competitive environment for some time.”

Retailers

Key findings:

  • 30% of retailers said that sales volumes were up in September on a year ago, while 38% said they were down, giving a balance of -8%. This was below expectations (+3%), and a decline on the previous month’s balance (+9%)
  • 27% of respondents expect sales volumes to increase next month, with 20% expecting a decrease, giving a balance of +7%
  • 21% of retailers placed more orders with suppliers than they did a year ago, while 29% placed fewer orders, giving a balance of -8%
  • 19% of businesses reported that their volume of sales for the time of year were good, while 12% said they were poor, giving a balance of +7%
  • Growth in internet sales volumes slowed in the year to September (+32%) from the previous month (+42%)
  • Sales volumes grew in clothing (+41%) and hardware and DIY (+55%). Sales volumes fell markedly for grocers (-29%), specialist food & drink (-34%), footwear and leather (-38%).

Wholesalers

  • 52% of wholesalers reported sales volumes to be up on last year, and 13% said they were down, giving a balance of +39% - the highest balance since July 2015.

Motor traders

  • 36% of motor traders reported sales volumes were up on a year ago, while 0% said they were down, giving a balance of +36%. Sales volumes are expected to grow at a similar pace next month (+36%).

 

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