Historic slide in retail sales - CBI

The CBI’s monthly Distributive Trades Survey (conducted between 27 March 2020 and 15 April 2020) reveals that retailers expect a similar pace of decline in annual next month - the weakest expectations in survey history.

Orders placed on suppliers in the year to April also fell sharply, with a similar decline expected next month. Retail sales were below seasonal norms to the greatest extent since December 2008 and are expected to remain similarly weak in May.

Internet sales growth fell close to its weakest since the start of this series in August 2009 (the second lowest reading ever, the weakest being in June 2019) and is expected to remain well below the long-run average next month. Average online prices fell in the year to April, for the first time since this question was introduced in August 2009.

Additional questions asked in relation to COVID-19 revealed that (percentage of respondents, weighted):

• 67% of retailers reported that coronavirus is having a significantly negative impact on their domestic sales.
• 39% of retailers reported total shutdown of UK activity because of COVID-19.
• 44% of retailers reported temporarily laying off staff, whilst 8% reported permanent staff lay-offs.
• Nearly all retailers reported cash flow difficulties (96%), with just under half facing difficulties meeting tax liabilities (40%). 31% of retailers also faced constraints on the availability of external finance.

Rain Newton-Smith, CBI Chief Economist, said:

“It’s no surprise that the lockdown is hitting retailers hard. Two fifths have shut up shop completely for now. And sales of groceries and other essentials also fell, suggesting households may have been dipping into stockpiles built up prior to the lockdown or tightening their belts more generally as incomes take a hit.

"Although the livelihoods of hundreds of thousands of employees in retail remain at risk, there are encouraging signs that the Government’s Job Retention Scheme is providing genuine relief, with many opting for temporary rather than permanent lay-offs.

“Continued support for retailers to cover their fixed costs will be vital for ensuring that businesses are able to re-open when it’s safe and appropriate to do so.”

In other survey results, wholesalers saw sales volumes fall at the fastest pace since January 2009, and motor traders were unanimous in reporting a drop in sales. Wholesalers expect a sharper fall in sales next month, while the vast majority of motor traders expect sales to fall again in the year to May.

Key findings

Figures are balance statistics unless otherwise stated.

Retailers

• Retailers reported the sharpest fall in sales in the year to April since December 2008 – a balance of -55% in April, from -3% in March. This represented the joint lowest balance in the history of the survey.
• Retailers expect a similar pace of decline next month (balance of -54% in the year to May), the weakest expectations in DTS survey history.
• Orders placed on suppliers in the year to April also fell sharply (balance of -48% in April, from -19% in March), with a similar pace expected next month (-50%).
• Every sub-sector reported a negative balance in April, including grocers (balance of -27% from +94%) and specialist food & drinks (-4% from +42%) which both reported strong growth in March.
• Sales were seen as weak for the time of year and to the greatest extent since December 2008 ( balance of -48% in April, from -5% in March) and are expected to remain as weak in May (-48%).
• Internet sales growth slowed to (balance of) +8% in April, from +23% in March. While growth is expected to pick up in the year to May (+15%), it will remain well below the long-run average (+46%).
• Average online price growth was reported to be negative in the year to April, for the first time since this question was introduced in 2009 (balance of -9% from +15% in March). Prices are expected to continue to fall in the year to May (-7%).

Coronavirus special questions | Retailers (% of respondents, weighted)

• 67% of retailers reported the COVID-19 outbreak as having a significant negative impact on their domestic sales.
• 39% of retailers reported a total shutdown of UK activity due to the outbreak. For the distributive sector as a whole, this figure rises to 44%.
• 44% of retailers reported temporary staff lay-offs, whilst 8% reported permanent staff lay-offs. For the distributive sector as a whole, this rises to 59 59% laid-off temporarily, and 16% of staff laid of permanently.
• 96% of retailers reported cash flow difficulties, with 40% facing difficulties meeting tax liabilities. 31% of retailers also faced constraints on the availability of external finance.
• Retailers also reported other supply impacts, including shipping delays of goods (40%), shortages of goods (39%) and increased cost pressures (47%).

Wholesalers

• Wholesalers reported a marked fall in sales volumes (balance of -68% in April, from +24% in March) and expect and even sharper pace of decline in the year to May (-81%).
• Food and drink wholesalers reported a strong decrease in sales volumes in the year to April (balance of -59% in April, from +85% in March).

Motor traders

• Motor traders reported a rapid fall in sales in the year to April (balance of -100% in April, from -15% in March). Sales volumes are expected to remain flat in the year to May (-97%).