Tuesday, August 11, 2020

Retail sales slow according to latest data

Retail sales were broadly flat in the year to May following strong growth in April, according to the latest CBI Quarterly Distributive Trades Survey.

Year-on-year internet sales growth also slowed and fell below the long-run average. Total retail sales are expected to rise marginally again in June, but growth is set to remain below the long-run average.

Looking at individual sectors, clothing saw a sharp slowing in sales growth in the year to May, and grocers’ sales were flat after two months of growth. The hardware and DIY sector reported a robust rise in sales.

Tepid trading conditions for the retail sector are taking their toll on hiring and investment. The quarterly survey showed that employment declined in the year to May, for the second quarter running, and is set to fall again in the year to June.

Investment intentions also remained negative for a second consecutive quarter, and retailers once again expect the business situation to deteriorate over the next quarter.

The survey also revealed that average selling prices rose at the fastest pace in six years in the year to May, while the proportion of deliveries from suppliers accounted for by imports fell at the fastest pace in eight years.

Alpesh Paleja, CBI Principal Economist, said:“Retail sales flattened out this month, as the bounce in April unwound. It’s clear that households are increasingly feeling the pinch, as rising inflation pushes down on real earnings. Taken together with higher import cost pressures from a weaker pound, this is creating a challenging environment for retailers.”

Retailers

Key findings:

  • 29% of respondents reported that sales volumes were up on a year ago in May, while 27% said they were down, giving a balance of +2%.
  • Retailers expect sales volumes to pick up pace a little next month (+6%), with 26% expecting them to rise and 20% to fall.
  • Volume of sales for the time of year in May were considered broadly average (+1%) and are expected to remain so in June (+1%)
  • The volume of orders placed upon suppliers fell over the year to May, with 16% of survey respondents reporting a rise and 28% reporting a fall, giving a rounded balance of -11%.  Firms anticipate a broadly similar fall next month (-8%), with 15% expecting an increase and 23% a decrease.
  • Retailers expect their overall business situation to deteriorate over the next three months (-9%)
  • Investment intentions for the next year compared to the previous twelve months were negative (-9%), for the second consecutive quarter.
  • Average selling prices rose at the fastest pace since May 2011 in the year to May (+62%) with prices set to rise at a broadly similar pace next month (+60%).
  • Year-on-year growth in internet sales volumes slowed markedly (+31% from +48%) in May. Growth is expected to accelerate marginally next month (+36), but to remain below the long-run average (+52).
  • Grocers reported sales volumes flattening in the year to May (0%), while more robust growth was reported in other sub sectors, such as hardware and DIY (+66%) and non-store items (+53%).

Wholesalers

  • 61% of wholesalers reported sales volumes to be up on last year and 8% said they were down, giving a rounded balance of +54%.

Motor traders

  • 36% of motor traders reported sales volumes to be up on last year and 48% said they were down, giving a rounded balance of -13%.

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