25 March 2021
Retail sales volumes remained well below seasonal norms in March, and to a similar extent as last month, according to the CBI’s latest monthly Distributive Trades Survey.
The survey – which aggregated the views of 142 businesses, including 66 retailers – revealed a steep drop in the volume of retail sales in the year to March, highlighting the severe impact of the lockdown for many non-essential retailers. Sales volumes fell particularly sharply in sectors such as clothing, footwear, furniture & carpets and for department stores.
Meanwhile, the grocery sector – which remains open to customers – reported the biggest year-on-year decline in sales since April 2020. However, the decline was in comparison to a period of extraordinarily high demand in March 2020 as shoppers stocked-up on essential items ahead of the first national lockdown. Despite falling in comparison with last March, grocery sales were seen as good for the time of year this month. Similarly, hardware & DIY stores reported that sales were above seasonal norms.
Looking ahead, retailers expect sales to grow in the year to April. This is the first time expectations have been positive since December 2019, reflecting the anticipated reopening of non-essential retail from mid-April, but also the relatively low base for comparison, given that April 2020 saw the joint sharpest fall in sales since the start of the survey in 1983. Overall sales volumes are nonetheless expected to remain poor for the time of year next month, albeit to a much lesser extent than in March.
Orders placed with suppliers are expected to be broadly flat in the year to April, following sharp falls in the first three months of 2021. The ratio of stocks to expected sales fell below its long-run average in March and is expected fall further next month, with the level of stocks deemed to be broadly adequate.
Ben Jones, Principal Economist at the CBI, said:
“Retailers are looking forward to April with a sense of optimism, given the potential re-opening of the sector across the UK. However, it is clear that the potential easing of domestic restrictions next month will not be a panacea for all retailers. Expectations point to a fairly muted recovery, especially when considering that base effects will tend to flatter annual growth next month, given the historic drop in sales in April 2020.
“There may be several reasons for this caution, including the possibility of spending shifting away from retail to other sectors that are scheduled to re-open, such as outdoor hospitality, as well as continued requirements for social distancing in stores and expectations of a gradual return of footfall in town and city centres. Clothing and footwear firms in particular remained fairly downbeat.
“The extension of support announced in this month’s Budget was therefore hugely welcome. More broadly, retailers will be keen for the UK and EU to work together to minimise disruption, avoiding unnecessary cost and complexity for firms as the new trading relationship beds in.”
- Retail sales volumes fell sharply in the year to March (balance of -45%, from -45% in February), but are expected to grow in the year to April (+17%).
- Sales were seen as poor for the time of year to a similar extent to February (balance of -37% from -38%). Sales are expected to be below seasonal norms to a lesser extent in April (-19%).
- Orders in the year to March fell at broadly a similar pace as last month (balance of -33% from -36%) and are expected to be generally flat in the year to April (+1%).
- Stocks in relation to expected sales fell in March to below their long-run average (balance of +9%, from +22%; LR av is +18%) and are expected to be broadly adequate next month (-3%).
- Internet sales growth eased in the year to March (balance of +60%, from February’s record +75%) and are expected to slow to around the long run average next month (+48%; LR av is +46%).
Wholesalers and motor trade
- Wholesalers’ volumes declined at a slower pace for the second consecutive month (balance of -9% from -20% from -34%). Growth expectations for the year to April are the highest since September 2018 (+33%).
Motor traders reported a further decline in sales volumes (balance of -31% from -45%), but expect sales to be flat next month (-1%).