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CBI predicts retail sales growth next month

Shoppers shutterstock_204403288 725 x 500

Retail sales fell at the fastest pace since January 2012 over the year to April 2016, disappointing expectations for a pick-up in growth, according to the CBI’s latest monthly Distributive Trends Survey.

The survey of 117 firms showed that orders placed on suppliers also fell over the year, while sales for the time of year were considered to be average. Sales are expected to rebound next month, while orders are set to fall at a broadly similar pace.

Within retail, department stores and the clothing sector were the main drivers behind the fall in sales. Performance also deteriorated in the durable household goods sector and in footwear and leather goods.

Meanwhile, growth in the volume of internet sales slowed in the year to April, with the survey balance falling further below the long run average. Internet sales growth is set to pick up slightly in May.

In contrast to a weaker retail sector, wholesaling reported faster sales volumes growth in the year to April, while motor trades saw sales volumes rising at a slower pace over the year, although beating expectations of a more pronounced slowdown.

CBI Director of Economics, Rain Newton-Smith, said:

“Cold weather put a chill in sales of spring and summer ranges with a reported dip in retail sales in the year to April, but with the near-term outlook for household spending holding up the sector expects a modest rise in sales next month.

“However with margins remaining tight within the sector, retailers will continue to operate in a fiercely competitive environment for some time.”

Key findings

Retailers:
22% of retailers said that sales volumes were up in April on a year ago, whilst 36% said they were down, giving a rounded balance of -13%. This indicated a fall in sales from the previous month (+7%). Sales growth is set to rebound in the year to May (+9%), although it remains below the long-run average of +24%. 

21% of retailers reported sales volumes to be good for the time of year, with 21% reporting them to be poor, giving a balance of 0% - broadly in line with the long-run average of -1%.
19% of retailers placed more orders with suppliers than they did a year ago, and 32% placed fewer, giving a balance of -13%. Orders are set to fall at a broadly similar pace next month (-12%).

A number of sub-sectors saw reduced sales volumes: particularly in the non-specialised sector – which includes department stores (-48%) and the footwear and leather sector (-25%).

Grocers reported sales growth holding steady in the year to April. Growth in the volume of internet sales slowed in the year to April, with the survey balance (+19%) remaining below the long run average (+49%).

Internet sales growth is set to pick up in May.

Wholesalers:
52% of wholesalers reported sales volumes to be up on last year and 19% said they were down, giving a balance of +33%. Wholesalers expect sales to rise further in May 2016 (+41%).

Motor trades:
46% of motor traders reported that sales volumes were up on a year ago, while 7% said they were down, giving a balance of +39%, down from the previous month (+84%). Growth in sales is set to edge somewhat lower in May (+23%).

Source : CBI
http://news.cbi.org.uk/news/retail-sales-fall-on-a-year-ago-but-growth-expected-next-month/ 

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27 April 2016

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