Retail sales declined sharply in the year to October,
disappointing expectations for a solid expansion, according to
the latest monthly CBI Distributive Trades Survey.
The survey of 106 firms, of which 49 were retailers,
showed that in the year to October, retail sales fell at the
quickest rate since March 2009 – the height of the financial
crisis. Overall, sales for the time of year were considered to be
slightly below seasonal norms. Meanwhile, orders placed on
suppliers also dropped at the fastest rate since March
2009.
Looking ahead to the next month, retailers expect
sales volumes to stabilise in the year to November, but orders
are expected to see a further decline, albeit at a slower
pace.
Growth in online sales slowed in the year to October,
to a pace just below the long-run average, but is expected to
pick up slightly in the year to November.
Within the retail sector, recreational goods and
hardware & DIY performed well, but department stores and
specialist food & drink saw sales fall.
Meanwhile, wholesalers continued to report above
average growth in sales volumes in the year to October, with a
similarly strong increase expected in the year to November.
However, motor traders saw a sharp decline in sales volumes, and
expect a further fall in the year to November.
Rain Newton-Smith, CBI Chief Economist,
said:
“It’s clear retailers are beginning to really feel
the pinch from higher inflation. While retail sales can be
volatile from month to month, the steep drop in sales in October
echoes other recent data pointing to a marked softening in
consumer demand.
“This is a critical time for a sector that employs
three million people across Britain. The Government can give
retailers, especially those on the High Street, some much needed
relief in next month’s Budget by bringing forward the planned
switch of business rates indexation from RPI to
CPI.”
Key findings
Retailers:
-
15% of retailers said that sales volumes were up in
October on a year ago, whilst 50% said they were down, giving a
rounded balance of -36%. This significantly undershot
expectations (+23%), and was the steepest fall in sales volumes
since March 2009 (-44%), during the financial
crisis
-
14% of respondents expect sales volumes to increase
next month, with 12% expecting a decrease, giving a rounded
balance of +3%
-
14% of retailers placed more orders with suppliers
than they did a year ago, whilst 57% placed fewer orders,
giving a balance of -43%. This was the fastest decline since
March 2009 (-47%)
-
12% of retailers reported that their volume of
sales for the time of year were good, whilst 18% said they were
poor, giving a balance of -6%
-
Internet sales volumes continued to expand at a
healthy pace (+45) albeit slower than in the year to September
(+54%). Internet sales volumes growth is expected to edge
higher in the year to November (+50)
-
Sales volumes expanded in other normal goods (74%),
recreational goods (+64%) and hardware & DIY (43%).
Meanwhile, sales volumes decreased in specialist food &
drink (-32%) and non-specialised goods (i.e. department stores
(-45%).
Wholesalers:
-
58% of wholesalers reported sales volumes to be up
on last year, and 11% said they were down, giving a balance of
+47%. Volumes are expected to grow at a broadly similar pace
next month (+43%)
-
Growth in the volume of orders placed upon
suppliers accelerated (+37%, from +27% in September), but is
expected to slow modestly in the year to November
(+28%).
Motor traders:
-
25% of motor traders reported sales volumes were up
on a year ago, whilst 30% said they were down, giving a balance
of -5%. This was below expectations (+28%). Volumes are
expected to fall further next month (-12%).
Notes to Editors:
Firms responding to the Distributive Trades Survey
(DTS) are responsible for a third of employment in retailing. The
survey includes measures of sales activity across the
distributive trades. It was first introduced in 1983 and the
retail results form the UK component of the EC survey of retail
trades.
The survey was conducted between 27th September and
13th October 2017. 106 firms took part, of which 49 were
retailers, 49 were wholesalers and 8 were motor
traders.
A balance is the difference between the percentage of
retailers reporting an increase and those reporting a
decrease.
