UK retailers continue to face challenges in generating sales growth, according to the recent CBI Distributive Trades Survey. The survey, although not providing specific figures, gives an overall snapshot of the retail industry and retailer sentiment. It revealed that retail sales volumes have declined for the seventh consecutive month in November. Despite a slight improvement in sentiment, retailers anticipate a further decline in sales in December.

The survey also highlighted a reduction in employment within the retail sector in the year up to November, indicating potential job losses. Additionally, investment in the industry is expected to decrease in the coming year. Price pressures in the retail sector are expected to remain high, even as inflation rates ease.

Looking closer at the survey results, retail sales volumes fell in November, but at a slower pace compared to the previous month. The “weighted balance” was -11% in November, compared to -36% in October. It is important to note that these figures represent the percentage of retailers experiencing a decline in sales, rather than the percentage by which sales fell. Looking ahead, retailers anticipate a further decrease in sales volumes next month, although at a slower rate (-6%).

Sales in November were considered disappointing for the time of year, with a balance of -16% compared to -10% in October. Retailers predict that sales volumes will also fall below seasonal norms in December (-15%). However, some businesses remain optimistic, with +4% of retailers expecting their business situation to improve over the next three months. This marks a significant improvement from -14% one quarter ago.

While retailers still plan to reduce their investment over the next 12 months, the rate of decline is expected to be less severe compared to earlier projections (-11% from -25% in August). Retail selling prices continued to rise rapidly in November, with a balance of +73%. It is projected that selling prices will experience a similar rate of growth next month (+72%).

Furthermore, retailers perceived their stock positions as still being “too high” in November, despite a slight decrease (+13% from +27% in October). Stock levels are expected to remain relatively high in relation to anticipated sales next month (+12%). Internet sales volumes saw a rapid decline in November, although the contraction was less severe compared to October (-39% from -78%). Online sales are expected to continue to fall at a similar pace next month (-42%).

Commenting on the survey results, Martin Sartorius, CBI Principal Economist, expressed disappointment that the Autumn Statement did not provide relief from the upcoming increase in business rates. He emphasized that many retailers are facing additional cost pressures at a time when they can least afford them, despite relief being prioritized for SMEs and key sectors.

In conclusion, the CBI sales survey shows that UK retailers continue to struggle with sales growth, with volumes declining for the seventh consecutive month. However, there is a slight improvement in sentiment, as some retailers anticipate a slower decline in sales volumes next month. Despite challenges, retailers remain hopeful for a gradual improvement in the industry’s business situation over the next three months. However, concerns about rising costs, job losses, and high stock levels persist.

Useful links:
CBI: UK Retail Sales Remain Downcast
CBI Distributive Trades Survey – November 2021