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Retail sales stabilise but non-essential retailers continue to struggle - CBI

Retail sales stabilise but non-essential retailers continue to struggle – CBI.

Retail sales were broadly flat in the year to July after three months of sharp declines, according to the CBI’s monthly Distributive Trades Survey. The improvement was primarily driven by stronger grocery sales, although conditions appear to have eased more widely following the re-opening of non-essential retailers on July 4th.

Alongside higher grocery volumes, sales of hardware & DIY products and other normal goods (cards, flowers, stationary) returned to growth in the year to July. Although most other retailers (e.g. clothing, footwear and department stores) continued to report significant declines, in some cases falls were less severe than in recent months. Overall, sales are expected to dip slightly in the year to August.

Sales were seen as average for the time of year, marking the highest survey balance since November 2019. Sales are expected to be remain close to seasonal norms next month.

The survey (conducted between 26 June 2020 and 15 July 2020) also reveals that orders placed on suppliers fell for the fourth consecutive month, though at a slower pace than in June. Retailers anticipate they will fall at a similar pace next month.

Rain Newton-Smith, CBI Chief Economist, said:

“It’s great to see retail sales stabilise this month, but this doesn’t tell the whole story. This crisis has created winners and losers within the retail sector and for some businesses the picture remains bleak.

“The re-opening of non-essential retail was a vital step towards recovery but isn’t a cure-all. The Government has provided critical support for firms and jobs throughout the crisis. But ongoing financial pressures are a major challenge for some retailers, and additional direct support to shore up cash flow, such as extension of business rates relief, should be considered.”

In other survey results, wholesalers reported the fourth consecutive month of falling sales and orders, though at a slower pace than last month. Both sales and orders are expected to fall at a sharper pace in the year to August.

Motor traders reported growth in sales in the year to July, the first increase since February, but expect a return to negative territory next month.

Key findings

Retailers

  • Retail sales were broadly flat in the year to July (balance of +4%, from -37%) and are expected to dip slightly next month (-5%).
  • Orders placed on suppliers in the year to July also fell (balance of -14%, from -47%) and are expected to fall at a similar pace next month (-14%).
  • Sales were seen as normal for the time of year (balance of 0%, from -34%) and are expected to remain so in August (-2%).
  • Internet sales growth remained above the long run average (balance of +48%, from +50%) and is expected to pick up further in the year to August (+61%).

Wholesalers

  • Wholesalers reported a slower fall in sales volumes (balance of -22%, from -66%) and expect a sharper pace of decline in the year to August (-47%).
  • Wholesalers also reported a slower fall in orders (balance of -32%, from -57%) but expect a sharper fall next month (-45%).

Motor traders

  • Motor traders reported a pick-up in sales in the year to July (balance of +18%, from -80%). Sales volumes are expected to fall in the year to August (-10%).

28 July 2020

Notes to Editors:

The Distributive Trades Survey (DTS) includes measures of sales activity across the distributive trades. It was first introduced in 1983 and the retail results from the UK component of the EC survey of retail trades.

The DTS survey was conducted between 26 June 2020 and 15 July 2020.  A total of 133 businesses responded, 62 retailers, 55 wholesalers and 16 motor traders.

A balance is the weighted difference between the percentage of retailers reporting an increase and those reporting a decrease.

About the CBI: Across the UK, the CBI speaks on behalf of 190,000 businesses of all sizes and sectors. The CBI’s corporate members together employ nearly 7 million people, about one third of private sector-employees. With offices in the UK as well as representation in Brussels, Washington, Beijing and Delhi, the CBI communicates the British business voice around the world.

Media Contact: The CBI Press Office is available 24 hours a day on 0207 395 8239, or email: press.office@cbi.org.uk. Follow the CBI (@CBItweets) and CBI Economics (@CBI_Economics).

 

Original article link: https://www.cbi.org.uk/media-centre/articles/retail-sales-stabilise-but-non-essential-retailers-continue-to-struggle-cbi/

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