According to the latest Distributive Trades Survey conducted by the CBI, the UK’s clothing and footwear stores are still struggling to meet demand, despite overall growth in the retail sector. Retail sales in July grew at a rate similar to the previous month, with a growth rate of 23% compared to 25%. Retailers described July’s sales as average for this time of year, but they anticipate a robust pace of growth next month, with a projected growth rate of 29%.
Online sales, on the other hand, have not been able to achieve significant growth. They remained stagnant in the year to July, and growth has been slowing down since physical retail reopened five months ago. Retailers are hopeful for a pickup in internet sales next month, but it is expected to remain below the long-run average.
The survey, which included 124 firms including 51 retailers, also highlighted that overall orders in July saw the fastest growth rate since December 2010, with a growth rate of 49% compared to 30% in the previous period. However, orders growth is expected to slightly slow down to 39% next month.
An interesting finding from the survey is that stock levels in relation to expected sales reached a survey record low in July for the second consecutive month. This indicates that retailers are struggling to keep up with demand. Ben Jones, principal economist at the CBI, emphasized the operational challenges faced by retailers, including low stock levels and labor shortages caused by staff being required to self-isolate.
While consumer demand continues to drive the UK’s economic recovery, the retail sector is clearly facing obstacles. Despite the overall growth in sales, the clothing and footwear segment is still grappling to return to pre-pandemic levels. In addition, online sales are struggling to achieve significant growth. These challenges, coupled with operational difficulties such as low stock levels and labor shortages, pose ongoing challenges for retailers.
To address these challenges, retailers need innovative strategies and solutions to navigate the changing retail landscape. Finding ways to stimulate demand for clothing and footwear, as well as enhancing the online shopping experience, will be crucial in ensuring the sector’s recovery.
Useful articles for further reading:
1. UK shoppers increase spending as COVID-19 rules lift
2. Retail sales pick up as shoppers return to High Street
