Retail sales decline slows in July – CBI Distributive Trades Survey

Retail sales volumes fell at a markedly slower pace in the year to July, according to the latest CBI Distributive Trades Survey. Retailers separately judged July’s sales to be below seasonal norms, though to a considerably lesser extent than last month.

Retailers anticipate that sales volumes will decline in the year to August at a similar pace to July, but that sales will disappoint further relative to seasonal norms.  

Key findings included:

• Retail sales volumes contracted at a noticeably slower rate in the year to July (weighted balance of -26% from -54% in June). Sales are expected to fall at a similar pace next month (-26%).
• Retail sales for the time of year were judged to be “poor” in July, though to a considerably lesser degree than last month (-18% from -40% in June). August’s sales are set to fall short of seasonal norms to a greater extent (-29%).
• Online retail sales volumes dropped at a steep rate in the year to July (-47% from 0% in June) and are expected to decline at a similar pace next month (-48%).
• Wholesale sales volumes were broadly unchanged in the year to July (+2% from -20% in June), ending a run of 25 months of decline. However, wholesalers expect sales to fall again next month (-7%).
• Total distribution sales volumes were broadly flat in the year to July (+1% from -33% in June), marking the strongest reading since May 2024. Sales are set to contract at a modest rate next month (-5%).

Martin Sartorius, Lead Economist, CBI, said:

“Retailers reported that the ongoing sales downturn lost steam in July, but a recovery still looks some way off as gloomy sentiment and elevated cost pressures weigh on activity. That said, conditions in the rest of the distribution sector were less downbeat, with wholesalers seeing stable volumes for the first time in over two years and motor trade sales rebounding.

“Distribution firms will welcome the Prime Minister’s focus on supporting local high streets and will be looking for broader business rates reform to address one of the key constraints on investment and growth. To deliver inclusive growth in every postcode, the government must also take further action to tackle rising labour costs while protecting labour market flexibility, so that the sector can continue to provide young people with rewarding routes into work.”

In addition, data from the survey showed:

• Retail orders placed upon suppliers contracted at a faster pace in the year to July (-31% from -26% in June). The rate of decline is set to accelerate further in August (-36%).
• Retail stock volumes relative to expected sales remained broadly in line with the long-run average in July (+16% from +19% in June; long-run average of +17%). Stock positions are set to soften slightly next month (+12%).
• Motor trades sales volumes rebounded in the year to July, growing at the fastest pace since April 2024 (+57% from -30% in June). Motor traders anticipate sales to continue growing at a rapid pace in August (+50%).