WiredGov Newswire (news from other organisations)
Printable version

An average May for retailers, but investment intentions soar - CBI

Retail sales were viewed as broadly average for the time of year in May, according to the CBI’s latest Distributive Trades Survey – and are expected to remain close to seasonal norms next month.

The survey of 114 firms, including 45 retailers, was conducted between 28 April and 17 May. This was a period when all retailers were once again open for business, but before the full relaxation of restrictions for the hospitality and leisure sectors, which also play a vital role in supporting activity in town and city centres.

With the easing of lockdown, retailers are looking to invest in their businesses once again, with investment intentions for the coming 12 months rising at the fastest pace since February 1994.

However, employment continued to fall sharply in the year to May – a four-year trend of declining headcount having accelerated over the past year.

Sentiment across the sector remained fairly subdued, with retailers expecting their overall business situation to remain broadly stable over the next three months.

Wide disparities remain evident within the retail sector. While grocers, non-store retailers, hardware & DIY, and furniture & carpets retailers reported that sales were significantly above seasonal norms, sales were below normal in clothing and specialist food.    

Stock levels in relation to expected sales were seen as too low, and to the greatest extent since the start of the series in 1983. Average selling prices grew at their fastest rate since November 2019 and are expected to grow at a similar pace next month.

Both sales and order volumes grew in the year to May, though the comparison is distorted by the low level of activity during the first national lockdown 12 months ago.

Meanwhile in other parts of the distribution sector, both wholesalers and motor traders reported sales above seasonal norms – and expect this trend to continue next month.

Ben Jones, Principal Economist at the CBI, said:

“The fact that sales were in line with seasonal norms is a definite improvement from earlier in the year, but this month’s survey was perhaps a touch disappointing after April’s stronger results.

“Some retailers have suggested the increase in demand after the initial reopening of non-essential retail in early April was either short-lived or less strong than expected. And non-store sales remain well above seasonal norms, suggesting that some consumers who migrated to online shopping during the pandemic have not fully shifted back to old habits.

“As the economy moves toward a new normal, it’s clear that the pandemic has exacerbated pre-existing challenges for some retailers. The trend away from bricks-and-mortar retail has accelerated, while rent arrears and accrued debts have added to the cumulative burden of costs. The lockdown may be over, but its impact on the sector will be felt for a good while yet.”

Key findings

Retail

  • Retailers reported sales volumes were broadly average for the time of year, (balance of -3% from +16% in April). Sales are expected to remain close to seasonal norms next month (+3%).
  • Volumes of both sales (+18% from +20%) and orders (+22% from -1%) grew in the year to May, albeit in comparison to May 2020, when the first national lockdown depressed activity in the sector.
  • The volume of stocks in relation to expected sales was seen as too low (-15% from 0%, which was the lowest balance in survey history). Relative stock levels are expected to remain too low next month (-4%).
  • Investment intentions for the year ahead in May grew at the sharpest pace since February 1994 (+35% from -8% in February).
  • Average selling prices grew at their fastest rate since November 2019 (+53% from +28%), with similar growth expected in the year to June (+53%).
  • Total employment continued to fall sharply in the year to May (-37% from -44%) and is expected to continue to do so next month (-37%)
  • Firms expect the overall business situation to remain broadly stable (+3%) over the next three months.
  • Import penetration compared to a year ago fell at a faster pace in the year to May (-10% from -3% in the year to February).

Wholesalers and motor trade

  • Wholesalers (balance of +18% from +11%) and motor traders (+6% from +21%) both reported sales above seasonal norms. Sales in both sectors are expected to remain above seasonal norms next month (+22% and +8% respectively).

 

Original article link: https://www.cbi.org.uk/media-centre/articles/an-average-may-for-retailers-but-investment-intentions-soar-cbi/

Share this article

Latest News from
WiredGov Newswire (news from other organisations)

400 DAYS LATER: ITs Path out of Covid