Retailers report bleak holiday trading as sales outlook darkens – CBI Distributive Trades Survey

Retail sales volumes fell at an accelerated rate in the year to December, extending a period of weakness that began in mid-2023 – according to the latest CBI Distributive Trades Survey.¹

The new year is expected to start on a gloomy note for the retail sector. Retailers anticipate that annual sales will fall sharply next month, with expectations at their weakest since March 2021.

Key findings included:

• Retail sales volumes fell at an accelerated rate in the year to December (weighted balance of -44% from -32% in November), with the downturn expected to deepen in January (-57%).

• Sales for the time of year were judged to be “poor” in December, to a greater extent than last month (-31% from -20% in November). Next month’s sales are set to similarly disappoint against seasonal norms (-34%).

• Online retail sales volumes declined at a moderate rate in the year to December, following two consecutive months of growth (-12% from +13% in November). Sales are expected to contract at a steep pace next month (-42%).

• Wholesale sales volumes fell in the year to December at the fastest rate since June 2020 (-50% from -31% in November). Wholesalers expect sales to decline at the same pace next month (-50%).

• Total distribution sales volumes (including retail, wholesale, and motor trades) fell in the year to December at the fastest rate since June 2020 (-46% from -35% in November). Firms anticipate that the pace of decline will quicken next month (-53%).

Martin Sartorius, Principal Economist, CBI, said:

“Retailers reported that annual sales volumes fell rapidly in December, as weak consumer confidence contributed to softer trading conditions in the lead-up to Christmas. Firms do not anticipate any relief in the new year, with sales expectations deteriorating to their weakest in over four years. The gloomy retail outlook was mirrored across the wholesale and motor trades sectors, which also expect sales to continue falling in January.

“Against a backdrop of weak trading conditions, there is a clear need for government action to lower the cost of doing business. Progressing reforms to the business rates system, lowering crippling energy costs, and finding balanced solutions to the Employment Rights Bill through secondary legislation would help restore confidence and unlock vital investment.”

In addition, data from the survey showed:

• Retail orders placed upon suppliers declined at a fast pace in the year to December (-42% from -25% in November). Retailers expect to cut back on order volumes at a faster rate in January (-59%), marking the weakest expectations since March 2021.

• Retail stock volumes were judged to be “too high” relative to expected sales in December, reaching their highest balance since May 2020 (+35% from +18% in November; long-run average of +17%). Stock positions are expected to soften markedly next month (+12%).

• Motor trade sales volumes contracted at strong pace in the year to December, though the decline was slower than in the previous month (-39% from -55% in November). Sales are expected to fall at a faster rate in December (-49%).