The retail industry in the UK faced a significant setback in September, with a notable decline in sales following a period of strong growth in August. This downward trend is expected to continue into the next month, although at a slower pace, according to the findings of the Confederation of British Industry’s (CBI) Distributive Sales Survey.
In September, retail sales volumes plummeted by an alarming -20%, marking a sharp contrast to the positive growth rate of +37% recorded in August. Looking ahead, it is anticipated that the decline in October will be somewhat less severe, projected at a rate of -13%. E-commerce sales volumes also suffered, experiencing a decline for the eighth consecutive month. The pace of decline increased from -7% in August to -19% in September. The CBI predicts that the downward trajectory in e-commerce sales will persist in the following month, although at a slightly reduced rate of -14%.
Taking into account the overall performance of the retail sector, sales exhibited a mildly disappointing decline of -7% compared to the growth rate of +3% achieved in August. The CBI’s outlook for the retail industry indicates that there is little hope for an improvement in the coming month, with seasonal sales expected to remain poor at -4%. Retailers continue to face challenges with excessive stock levels relative to expected sales.
Furthermore, orders placed with suppliers saw the fastest decline since March 2021 in the year leading up to September. It is projected that orders in October will remain relatively unchanged compared to September.
In the wholesale sector, sales volumes also saw a decrease in the year leading up to September, with a decline of -21% compared to the -1% recorded in August. This rate of decline is expected to persist in the following month. Similar to retailers, wholesalers reported facing excessive stock levels since February 2008.
Overall, the findings of the CBI’s Distributive Sales Survey paint a bleak picture for the retail and distribution sectors in the UK. The decline in retail sales and e-commerce volumes, along with the burden of high stock levels and declining orders, indicate a challenging period ahead for businesses operating in these sectors.
Useful links:
1. BBC: UK retail sales suffer significant decline in September
2. Financial Times: Retail sales in UK continue to fall amid supply chain issues
