The UK High Street is having a difficult summer as retail sales fell for the third month running in the year to July, and the forecast for August is also weak, the CBI said today (Tuesday).
However, its latest Distributive Trades Survey showed that the latest drop in sales was similar to the more moderate rates seen in May and June, and not as severe as the heavy falls seen between July 2008 and March 2009.
The survey revealed that, when asked about year-on-year sales volumes in the year to July, 32% of respondents said that volumes had increased, while 47% said they were down. The resulting balance of -15% was better than expected (-21%), although a slightly heavier fall is predicted in August (-23%).
Sales were said to be poor for the time of year by a balance of 32% of retailers, which was worse than expected and more severe than in June (-15%). A net 27% expects sales to remain below seasonal norms in August.
The three month moving average of sales volumes, which smoothes out monthly peaks and troughs, remained negative (a balance of -16%), and is expected to worsen in August (-21%).
Stocks remain adequate in relation to expected demand, but the volume of stocks lay below its long-run average for the third consecutive month.
The volume of orders placed upon suppliers fell again, with a balance of 13% of retailers reporting a drop in July, and a balance of 17% foreseeing a decline in August.
Turning to individual retail market sectors, grocers continued to see strong growth on a year ago. The only other sector to report growth was footwear & leather (a balance of +64%), which saw its strongest result since August 2007 (+70%).
Falling sales were reported by retailers of hardware, china & DIY, and furniture & carpets. While sales continued to fall in the durable household goods sector, they dropped at a slower rate than the very heavy falls seen in the past year.
Andy Clarke, Chairman of the CBI Distributive Trades Panel, and Chief Operating Officer of Asda, said:
"Many retailers are having a difficult summer and no pick-up is expected in August. But the overall sales falls are not as heavy as we saw at the start of the year, and some retail sectors are reporting growth. The recent sharp rise in unemployment will worry many consumers, and is likely to constrain sales growth in the months ahead."
Sales volumes in the wholesale sector fell again in the year to July. The balance of 19% reporting a fall was less severe than in June (-36%) but a heavier fall (-38%) is anticipated in August. Industrial materials and builders' merchants wholesalers had another very difficult month, but food and drink wholesalers reported strong sales growth.
Motor traders' sales volumes fell sharply in the year to July (a balance of -76%), despite a flat June (-1%) and expectations of only a marginal decline in July (-4%). A balance of 50% expects sales to fall in August. Sales were harder hit for traders of vehicles, rather than those selling parts & accessories, though both reported a notable fall in sales.
1. The Distributive Trades Survey (DTS) covers 20,000 outlets of firms responsible for 40 per cent of employment in retailing. It 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. It is an accurate early indicator of monthly retail sales.
2. The survey was conducted between 24 June and 15 July. 145 firms took part.
3. A balance is the difference between the percentage of retailers reporting an increase and those reporting a decrease.
4. 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. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi the CBI communicates the British business voice around the world.