Sales growth halts, but retailers expect pick-up - CBI
Retailers expect sales growth to pick up next month after flat sales in March, according to the CBI’s latest monthly Distributive Trades Survey.
The survey of 118 firms, including 69 retailers, found that flat retail sales volumes in the year to March put an end to six months of slowing growth.
Sales volumes were also well below average for the time of year, and weaker than expected.
Orders, too, were broadly flat on a year ago, although this was better than expected, while stock levels jumped in March.
But the outlook is brighter for next month, when retailers expect sales volumes and orders to increase.
Barry Williams, Asda Chief Merchandising Officer for Food, and Chair of the CBI Distributive Trades Survey Panel, said:
“This month we’ve seen a glimmer of hope for retailers fade away, with the news that six months of sales growth has come to an end. All eyes are now on April when retailers expect sales to return to form.
“However, pay freezes and the rising cost of living are hitting households hard and, added to a challenging economic picture, there may well be more tough trading conditions ahead.”
The survey was conducted between 26th February and 13th March.
- 26% of firms reported that sales volumes were up on a year earlier, and 26% said they were down, giving a balance of 0%. This was the lowest balance since August 2012 (-3%), ending six consecutive months of growth, and disappointing expectations of positive sales growth (+9%)
- 17% reported good sales volumes for time of year, and 37% poor. The resulting balance of 20% was weaker than expected (-5%)
- 29% placed more orders with suppliers than they did a year ago, and 31% fewer, resulting in a rounded balance of -1%, which nonetheless beat expectations of -19%
- Grocers recorded no sales growth in the year to March (0%), though this was an improvement on the decline seen in February (-26%)
- Clothing and footwear & leather retailers saw a strong fall in sales (-53% and -32% respectively). But this was offset by rising sales in other sectors such as furniture & carpets (+82%) and non-store retailers (+46%)
- Sales volumes are expected to pick-up in the year to April, with 37% of firms expecting an increase versus 22%, resulting in a balance of +15%. Sales volumes are expected to be in line with their average for the time of year, with 18% of retailers expecting sales volumes to be good and 18% poor, giving a rounded balance of -1%.
The survey also heard from 43 wholesalers and 6 motor traders.
45% of wholesalers reported sales volumes were up on a year earlier, and 23% said they were down, giving a balance of +22%. This solid growth in sales volumes exceeded expectations (+12%). Wholesalers expect further sales growth in the year to April (+17%)
23% of motor traders reported sales volumes were up on a year earlier, and 46% said they were down, giving a balance of -23%. This disappointed expectations of strong sales growth in the year to March (+50%). Motor traders expect sales to be flat (0%) in the year to April.
- 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 26th February and 13th March 2013. 118 firms took part, of which 69 were retailers, 43 were wholesalers and 6 motor traders.
- A balance is the difference between the percentage of retailers reporting an increase and those reporting a decrease.
- The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. The organisation is also the UK's official business representative in the European Union, which generates more than 50 per cent of regulation affecting British firms. With offices across the UK as well as in Brussels, Washington, New Delhi and Beijing, the CBI coordinates British business representation around the world.