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CBI: Retail sales resilient in run-up to Christmas

Retail sales remained resilient in the year to November, with the pace of growth expected to accelerate once again in the crucial Christmas run up, according to the CBI’s latest quarterly Distributive Trades Survey

The survey of 130 firms also showed that employment growth remained robust, with the rise in headcount in the retail sector anticipated to be the fastest since May 2002 in the year to December.

Investment intentions for the year ahead remained positive with respondents expecting a moderate improvement in their business situation over the next three months. Average selling prices have been under pressure, and are now rising at their slowest pace since May 2009.

Sales volumes rose particularly strongly among grocers, furniture & carpet and hardware & DIY retailers. Growth in orders placed with suppliers was below expectations but is expected to pick-up again next month.

Barry Williams, CBI Distributive Trades Survey Chairman and Asda Chief Merchandising Officer for Food, said:

“It’s no secret that it has been a demanding year for the retail industry but shopkeepers haven’t been pulling their punches when it comes to getting shoppers through their doors – borne out with the lowest essential item inflation in five years and growing online sales.

“This latest survey shows many have been winning some rounds in what has been one of the most challenging years for both the industry, and for customers.

“We’re seeing encouraging signs that pressure on family budgets is letting up, and although there is some way to go with the broader economy, there can be some optimism for retailers and customers alike as we enter the crucial run up to Christmas. With prices under pressure and more firms adopting US-style Black Friday offers, retailers are expecting a festive boost next month and are certainly doing their best to put smiles on customers’ faces and make it easy on their pockets.”


Key findings:

44% of respondents reported that sales volumes were up on a year ago, while 17% said they were down, giving a balance of +27%, slightly below expectations (+31%)

Retailers expect sales volumes to grow at an even stronger pace next month (+38%), with 50% expecting them to rise and 12% to fall

Most sub-sectors saw growth in sales volumes, with grocers (+67%), furniture & carpets (+74%), and hardware & DIY (+54%) leading the way. Specialist food and drink saw sales fall on a year ago (-34%), as did clothing (-39%)

Volume of orders placed upon suppliers (+4%) was below expectations (+13%), but firms anticipate a strong rebound next month (+20%)

Stocks hit a record high relative to expected demand (+46%), but are expected to drop back slightly in December (+30%). High stocks may in part be due to unexpectedly weak volumes of sales for the time of year in October (-10%)

Retailers expect their overall business situation to improve over the next three months (+6%), with the same balance of firms intending to raise investment in the year ahead (+6%)

The volume of internet sales rose strongly (+72%), the highest balance since October 2010 (+73%)

Average selling prices inflation (+12%) slowed it its lowest since May 2009 (+12%) with firms anticipating selling price inflation to slow further next month (+9%, which would be the lowest since May 2006, -4%)

Employment grew on a year ago (+14%), with the expectation of even better results in the year to December (+16%, the highest since May 2002, +17%).

60% of wholesalers reported sales volumes to be up on last year and 10% said they were down, giving a balance of +50%. Sales volumes for building materials were at their highest (+97%) since September 2013 (+100%).

Motor traders
37% of motor traders reported sales volumes to be up on last year and 26% said they were down, leaving a rounded balance of +12%. Motor traders believe their volume of sales will be broadly flat next month (-1%) after a year of generally strong growth.

Source : CBI

26 November 2014

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