Insight 43 - Magazine - Page 39
POOR SENTIMENT AMONG
RETAILERS LINGERS IN LATEST
DISTRIBUTIVE TRADES SURVEY
Y
ear-on-year retail sales volumes
declined in February for the fifth
consecutive month, according to
the latest quarterly Distributive Trades
Survey. Retailers expect sales to fall at a
somewhat faster pace in March.
Retailers remain downbeat about
their future business situation, and
this sentiment was reflected in their
expectations to cut back on headcount
and capital expenditure going forward.
In particular, investment intentions
worsened to the greatest extent since May
2019.
Key findings included:
• Year-on-year retail sales volumes fell in
February at a broadly similar pace to last
month (weighted balance of -23% from
-24% in January). Firms expect that sales
will fall at a somewhat faster pace in
March (-30%).
• Sales for the time of year were judged to
be “poor”, to a greater extent than last
month (-34% from -24% in January).
Retailers expect that March sales will also
disappoint compared to seasonal norms,
but to a modestly lesser degree (-27%).
• Sentiment amongst retailers remained
poor in February, with firms expecting
their business situation to deteriorate
over the coming quarter (-19% from -21%
in November).
• Retailers expect to reduce investment
in the next 12 months (compared to the
past 12 months) to the greatest extent
since May 2019 (-56% from -27% in
November).
• Headcount in retail declined at a
moderate pace in the year to February
(-13% from -18% in November).
Employment is expected to fall at a
broadly similar rate in March
(-15%).
• The total distribution
sales volumes
(including retail, wholesale, and motor
trades) fell firmly in the year to February
(-26% from -32% in January). Sales are
expected to decline at a slightly slower
pace in March (-22%).
In addition, data from the survey showed:
• Retail selling price inflation remained
below the long-run average for the fourth
consecutive quarterly survey (+25% from
+24% in November; long-run average
+41%). Retailers expect selling prices
to increase at an unchanged rate next
month (+25%).
• Retail orders placed upon suppliers
declined at a fast pace in the year to
February (-38% from -43% in January).
Orders are expected to be cut back at
an accelerated rate next month (-47%;
weakest expectations since March 2021).
• Retailers reported that stock volumes
relative to expected demand softened in
February, broadly in line with the longrun average (+16% from +26% in January;
long-run average +17). Stock positions
are set to remain broadly unchanged in
March (+13%).
• Online retail sales volumes declined
at a faster pace in the year to February
(-28% from -22% in January). Sales are
expected to fall at a broadly similar rate
next month (-29%).
• Wholesales annual sales volumes
declined at a moderate pace in
February (-19% from -30% in January).
Wholesalers expect the sales downturn to
ease further in March (-14%).
• Motor trades annual sales volumes fell
in February at a similarly rapid pace as
seen over the past two months (-58%
from -59% in January). Motor traders
expect the sales decline to decelerate
considerably next month (-30%).
Martin Sartorius, Principal Economist, CBI,
said: “February marked another month
of falling annual sales in the retail sector.
This trend of poor business conditions
extended across the broader distribution
sector, with wholesalers and motor traders
also reporting a drop in sales. Looking
ahead, retailers expect a sharper sales
downturn in March, partly due to the later
timing of Easter compared to last year.
“Persistently weak demand conditions
and the impact of the Autumn Budget
have dampened retailers’ sentiment,
contributing to the steepest deterioration
in investment intentions in nearly six
years. These worrying data make it clear
that the government’s plan to kickstart
growth is now more important than ever.
“Businesses need a boost in confidence
after a tough period that has seen their
overheads increase and headroom for
investment squeezed. Reforming business
rates and the Apprenticeship Levy would
go a long way to support firms as they
work alongside government to create the
jobs, investment, and growth that we all
want.”
biz4Biz.org
39
