WIREDGOV

The monthly survey – of 117 firms, including 56 retailers – was conducted between 26 May and 16 June. Across the distribution sector as a whole, it found that stock levels in relation to expected sales reached a record low in June (a question first asked in August 1983), with firms in the retail, wholesale and motor trades sectors all reporting relative stocks as too low. No improvement is expected next month.

Within the retail sector, grocers reported that sales remained above seasonal norms, as did sub-sectors related to home improvements (furniture & carpets, hardware & DIY). Department stores saw an upturn in their fortunes, with sales now average for the time of year. And although clothing stores reported that sales remined poor for the time of year, this was to a much lesser extent than last month.

Over the year to June, retail sales and orders grew at the fastest pace since August 2018 and September 2015, respectively. However, these indicators are less useful for assessing current conditions within the sector, as they compare sales and orders to June 2020, when activity was depressed by the national lockdown, which remained in force until the middle of that month.

Meanwhile, growth in internet sales slowed sharply in the year to June, to the weakest pace since April 2020 and well below the long-run average. (Sales growth in June 2020 was just above the long-run average). A similar pace of growth is expected next month.

Wholesalers reported the most positive sales performance in relation to seasonal norms since November 2018, while motor traders reported sales as good for the time of year to a greater extent than last month. Both expect sales to remain above seasonal norms next month.

Ben Jones, Principal Economist at the CBI, recently said:

“After a generally gloomy 2021 so far, the sun finally shone for retailers in June, with seasonal sales volumes the strongest since November 2016. This was the latest sign that the success of the vaccination programme is feeding through to stronger consumer confidence which, along with the re-opening of hospitality, is encouraging shoppers back onto the streets.

"But the sector remains a long way from a full recovery. The return of demand is patchy, with inner-city footfall still well down. The outlook is also clouded somewhat by supply pressures, with stocks seen as too low compared with expected sales, as logistical and capacity challenges continue to hamper global activity.

“Even as consumer demand returns, the legacy of lockdowns on retailers’ balance sheets remains. Many will welcome the rent moratorium extension, but more support is needed, starting with holding off on tapering existing business rate reliefs.“

Key findings

• Sales were above seasonal norms to the greatest extent since November 2016 (+23% from -3% in May). Sales are expected to remain good for the time of year next month (+23%).
• Wholesalers reported the most positive sales performance in relation to seasonal norms since November 2018 (+34% from +18%), while motor traders reported sales as good for the time of year to a greater extent than last month (+16% from +6%). In both sub-sectors sales are expected to remain above seasonal norms next month (+29% and +19% respectively)
• Across the distribution sector, the volume of stocks in relation to expected sales reached a record low in June (-19% from -6%, question first asked in 1983), with all three main sectors reporting stocks as too low. Relative stock levels are expected to remain low next month (-22%).