Monday, July 6, 2020

Retailers remain pessimistic over near-term outlook

Retailers reported another steep drop in sales in the year to June, but stronger growth for grocers and stable volumes in the specialist food and drink sector ensured a slower pace of decline than in May.

The CBI’s monthly Distributive Trades Survey, conducted between 27 May and 12 June revealed that retailers expect sales volumes to fall at a slightly faster pace in the year to July, mostly reflecting slower growth for grocers and a decline in sales for specialist food & drink retailers.

While “non-essential” retailers were allowed to re-open from the 15th June, the balances for expected sales volumes in most of these sub-sectors remain extremely negative, with the vast majority of respondents expecting sales to be lower compared with July 2019. The overall level of sales is expected to be poor for the time of year in July. And asked about potential challenges for re-starting businesses, 62% of retailers cited a lack of demand from customers.

Meanwhile, growth in internet sales volumes picked up to a rate above the long-run average, with online sales rising at the fastest pace since October 2018. Internet sales are expected to grow at an even faster pace next month.

With overall sales volumes falling, orders placed on suppliers continued to decline in the year to June, albeit at a slower rate than last month, with a broadly similar pace of decline expected in the year to July. Stock levels in relation to expected sales fell in June, but remained high compared to the historical average, and are expected to increase in July.

Rain Newton-Smith, CBI Chief Economist, said: “With high street shops, department stores and shopping centres re-opening across England last week amid some scenes of long queues, you’d be forgiven for thinking retailers’ difficulties are coming to an end. But the health of the retail sector remains in the balance.

“Despite retailers working flat out to make sure they are safe and ready to open their doors, outside the grocery sector most retailers expect sales to be far below where they were this time last year.

“Enabling these businesses to open is a critical step on the road to restarting our economy and will help support hundreds of thousands of jobs across the UK.”

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