According to the latest CBI Distributive Trades Survey, retail sales in June suffered a setback, making it the second consecutive month of decline. While this survey has a different methodology from other industry tracking organizations, it is significant as it provides early insights into current market trends. Key findings from the survey show that retail sales volumes continued to decline in the year leading up to June, with a “weighted balance” of -9%. This is a slight improvement from the -10% reported in May, but it is expected to reach 0% in July.
The weighted balance is calculated by comparing the percentage of retailers reporting an increase in sales volumes to those reporting a decrease. A negative balance indicates that more retailers are experiencing falling sales volumes rather than seeing a rise or maintaining stability. The survey also reveals a decline in orders placed with suppliers in the year leading up to June, although at a slower pace compared to the previous month (-10% compared to -30% in May). Similar declines in orders are expected for the following month (-9%). This is not surprising considering that retailers reported the strongest stock positions since May 2020 (+33% compared to +25% in May). Stock volumes are projected to remain higher than anticipated sales next month (+26%).
Furthermore, the survey highlights a rebound in internet sales volumes in the year leading up to June (+26% compared to -9% in May). This growth is expected to continue at a similar pace in July (+27%). Overall, retail sales volumes are described as “average” for this time of year, showing a slight improvement from the significant downturn in May (+1% compared to -18%). It is expected that these sales volumes will largely follow seasonal norms in the coming month (-2%).
Martin Sartorius, CBI Principal Economist, commented on the challenging environment faced by the retail sector, linking the contraction in sales volumes to high inflation affecting household finances. He emphasized the disproportionate impact of the business rates system on retailers compared to other industries. Sartorius highlighted the need for a redesign of the relationship between businesses, local authorities, and communities, stressing the opportunity and necessity for change.
In conclusion, the CBI Distributive Trades Survey indicates a continued decline in retail sales volumes, reflecting the persistently challenging conditions in the sector. With households under financial pressure from inflation, the outlook for retailers remains difficult. However, there is an urgent need to address the imbalances and redesign the relationship between businesses, local authorities, and communities to provide support for the struggling retail industry.
Useful links:
1. CBI Distributive Trades Survey
2. CBI (Confederation of British Industry)
