Little hope for growth in retail as sector suffers continued flat sales

Anna Leach, CBI

No growth is expected for retail after the beleaguered sector suffered flat sales volume for the third consecutive month in the year to January.

Sales were seen as poor for the time of year, but to a lesser degree than in December. They are expected to remain below seasonal norms in the year to February.

The latest quarterly monthly ‘CBI Distributive Trends Survey’ showed that stock levels in relation to sales rose above the long-run average in the year to January. Concurrently, orders placed with suppliers fell, with the pace of decline accelerating from December and retailers expecting a further fall next month.

Sales performance varied across the retail sector. In contrast to flat overall sales volumes, growth in internet sales picked up to the long-run average and is expected to accelerate slightly further next month.

By sub-sector, the biggest positive contribution to volumes growth came from non-specialised stores. This was offset by negative contributions from retailers of other normal goods, household furniture, and from hardware & DIY stores.

“Both official data and business surveys are painting a picture of subdued activity for retailers. A challenging Christmas has extended into the New Year, with little expectation of any improvement soon,” said Anna Leach, CBI Deputy Chief Economist.

“2020 looks set to be another tough year for the sector as growth in households’ disposable income is set to remain modest and retailers continue to battle longer-term issues such as digital disruption and the cumulative burden of policy costs.

“The upcoming Budget provides an opportunity for the Chancellor to support retailers, primarily by fixing the broken business rates system.”