According to the latest CBI distributive trades survey, the retail industry in the UK is entering a challenging period. Despite a better-than-expected sales boost during Black Friday, the overall outlook for retailers has “darkened in November.” The report reveals that sales volumes have declined in the year leading up to November, with the CBI reporting a figure of -19% compared to +18% in October. Unfortunately, the decline is predicted to continue in December, with a projected figure of -21%.
It is important to understand that these figures represent the weighted difference between the percentage of retailers reporting an increase and those reporting a decrease. This means that a larger number of retailers experienced declining sales during this period. The report also notes that sales volumes were considered average for this time of year, with +3% of retailers reporting this, compared to +20% in October. The expectation is for sales volumes to remain in line with seasonal norms in December, predicted to be around -1%.
In addition to physical retail, online sales also contracted in the year leading up to November, with a figure of -5% compared to -23% in October. This marks the 13th consecutive month of flat or falling internet sales. The report further anticipates a contraction of -26% in the coming month.
The employment growth in the retail sector has also been significantly impacted. In the year leading up to November, there was a decline of -17% in employment numbers, marking the first decrease since August 2021. An additional decline of -12% is expected in the next month.
Martin Sartorius, the CBI’s Principal Economist, has highlighted the challenging conditions in the UK economy, which have taken a toll on retailers. Consequently, retailers have become pessimistic about future business prospects. Investment intentions have also worsened, reaching the greatest extent since May 2020. Sartorius emphasized the importance of the retail and wholesale sectors, as they contribute £352 billion to the UK economy and support a fifth of the nation’s jobs. While the recent decision to freeze business rates in April 2023 provides some relief, retailers are also seeking long-term measures from the government to restore momentum to the economy.
The CBI survey sheds light on the difficult landscape currently faced by retailers in the UK. With declining sales volumes, employment numbers, and investment intentions, it is evident that there are challenging times ahead for the sector. The industry requires support and long-term measures to revive the retail economy and secure the future of the sector.
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