Year-on-year retail sales volumes declined in February for the fifth consecutive month, according to the CBI’s latest quarterly Distributive Trades Survey.
Retailers expect sales to fall at a somewhat faster pace in March.
Retailers remain downbeat about their future business situation, and this sentiment was reflected in their expectations to cut back on headcount and capital expenditure going forward.
In particular, investment intentions worsened to the greatest extent since May 2019.
Key findings includes year-on-year retail sales volumes fell in February at a broadly similar pace to last month (weighted balance of -23% from -24% in January). Firms expect that sales will fall at a somewhat faster pace in March (-30%).
Sales for the time of year were judged to be “poor”, to a greater extent than last month (-34% from -24% in January). Retailers expect that March sales will also disappoint compared to seasonal norms, but to a modestly lesser degree (-27%).
Sentiment amongst retailers remained poor in February, with firms expecting their business situation to deteriorate over the coming quarter (-19% from -21% in November).
Retailers expect to reduce investment in the next 12 months (compared to the past 12 months) to the greatest extent since May 2019 (-56% from -27% in November).
Headcount in retail declined at a moderate pace in the year to February (-13% from -18% in November). Employment is expected to fall at a broadly similar rate in March (-15%).
The total distribution sales volumes (including retail, wholesale, and motor trades) fell firmly in the year to February (-26% from -32% in January). Sales are expected to decline at a slightly slower pace in March (-22%).
Martin Sartorius, Principal Economist, CBI, said, “February marked another month of falling annual sales in the retail sector. This trend of poor business conditions extended across the broader distribution sector, with wholesalers and motor traders also reporting a drop in sales. Looking ahead, retailers expect a sharper sales downturn in March, partly due to the later timing of Easter compared to last year.
“Persistently weak demand conditions and the impact of the Autumn Budget have dampened retailers’ sentiment, contributing to the steepest deterioration in investment intentions in nearly six years. These worrying data make it clear that the government’s plan to kickstart growth is now more important than ever.
“Businesses need a boost in confidence after a tough period that has seen their overheads increase and headroom for investment squeezed. Reforming business rates and the Apprenticeship Levy would go a long way to support firms as they work alongside government to create the jobs, investment, and growth that we all want.”
Leave a Comment