The retail sector had a sluggish start in January, despite the presence of significant discounts during the clearance sale month, according to the latest CBI Distributive Trade Survey. The survey, which interviewed 59 retailers, revealed that sales volumes declined rapidly in the year leading up to January. Suppliers also saw a sharp decline in orders placed, and stock levels were deemed higher than expected sales. However, there was a slight improvement in internet sales volumes, and sales are expected to grow next month, signaling the first anticipated sales growth since December 2021.
Between December 22nd and January 13th, the CBI survey reported a decrease in sales volumes for January, with a balance of -23% compared to +11% in December. This decline is projected to continue in the following month, but at a slightly slower pace, with an expected figure of -15%.
The survey also highlighted a decline in orders placed with suppliers in the year leading up to January, with a balance of -32% compared to -21% in December. This decline is forecasted to persist in the coming month, with a projected figure of -19%. Retailers noted that stock levels in January exceeded expected sales, with a balance of +23% compared to +16% in December. Although stock positions are expected to ease in the next month, they will still be considered too high, with a projected balance of +12%.
Regarding internet sales volumes, there was a decrease in the year leading up to January, but at a slower pace than the previous month, with a balance of -4% compared to -22% in December. Retailers, however, remain optimistic for a turnaround next month, as sales growth is expected to reach +4%, marking the first month of anticipated sales growth since December 2021.
The wholesale sector also experienced a decline in sales volumes in the year to January, with a balance of -18% compared to -14% in December. This decline is projected to accelerate next month, with a projected figure of -22%.
Martin Sartorius, Principal Economist at the CBI, commented on the survey findings, stating that retailers started the New Year with falling sales volumes and continue to face challenges such as rising costs and squeezed household incomes. Sartorius emphasized the importance of addressing the structural problems facing retailers, suggesting that reforming business rates and the Apprenticeship Levy could stimulate much-needed investment and help the UK avoid economic stagnation.
The CBI Distributive Trade Survey serves as an early indicator of retail trends each month and provides valuable insights into the sector’s challenges and opportunities. Despite the prevalence of discounts, the retail industry experienced a slow start to the year, with declining sales volumes and restrained consumer spending. As the sector grapples with rising costs and economic uncertainties, it remains crucial for the government to tackle structural issues and create a growth-friendly environment for retailers.
Useful links:
1. CBI: The official website of the Confederation of British Industry, which provides insights and resources for businesses across various sectors.
2. Retail Week: A leading publication covering the latest news, trends, and analysis in the retail industry.
