WIREDGOV

Retailers reported an unexpected rebound in sales volumes growth in the year to December, according to the CBI’s latest monthly Distributive Trades Survey. But firms anticipate little new year cheer, with sales set to decline again in the year to January. 

The key survey findings included:

• Retail sales grew at a moderate pace in the year to December (+11% from -19% in November), against expectations of a decline (-21% from November)
• But retailers do not expect the recovery to continue into the new year, anticipating that sales will decline again in the year to January (-17%)
• Sales volumes were seen as typical for the time of year in December (-3% from +3% in November) and are expected to remain broadly in line with seasonal norms next month (+2%)

Martin Sartorius, Principal Economist at the CBI, said: 

“It’s encouraging to see retail sales surprise by growing this month, but any festive cheer is expected to be short-lived. Retailers are bracing themselves for the chill winds that will blow through the sector this winter, with consumer spending set to be hit hard by high inflation in 2023”.

“The decision by the UK Government to freeze business rates from April provides some welcome relief to the retail sector. However, retailers also need to see long-term sustainable growth measures from the Government to encourage investment and address ongoing labour shortages”. 

In addition, data showed:

• Online retail sales fell at a firm pace in the year to December (-22% from -5% in November), with an even steeper decline expected next month (-34%)
• Orders placed upon suppliers declined in the year to December, but at a slower pace than last month (-21% from -32% in November). Retailers expect orders to fall at a broadly similar rate next month (-23%).
• Retailers considered stocks in December to be “too high” relative to expected sales, but to a lesser extent than last month (+16% from +22%). Stock positions are expected to ease again next month (+8%).
• Wholesale sales volumes fell in the year to December, but at a marginally slower pace than last month (-14% from -18%). 
• Motor trade sales volumes declined in the year to December, but at a more moderate rate compared to the previous month (-25% from -54%)
• Both wholesale (-33%) and motor trade volumes (-58%) are expected to fall at an accelerated pace next month.

This survey included 138 companies, including 50 retailers.