Retail sector shows signs of resilience
Retail sales volumes are expected to return to growth next month for the first time since September 2022, following broadly unchanged sales in the year to March, according to the CBI’s latest Distributive Trends Survey.
The survey, based on the responses of 135 companies (including 48 retailers) found:
- Retail sales volumes were broadly unchanged in the year to March (weighted balance of +1% from +2% in February). Sales are expected to increase at a moderate pace next month (+9%), marking the first positive growth expectations since September 2022.
- Retail sales in March were judged to be good for the time of year (+12% from +6% in February). Retailers expect sales to exceed seasonal norms to a broadly similar extent next month (+13%).
- Orders placed upon suppliers were broadly unchanged in the year to March (-2% from -25% in February) and are expected to remain unchanged next month (+0%).
- Retailers considered stock volumes in March to be elevated relative to expected sales, and to a broadly similar extent as last month (+10% from +8% in February). Stock positions are expected to ease slightly next month but remain “too high” (+6%).
Martin Sartorius, CBI principal economist, said: “It’s encouraging that activity in the retail sector showed signs of stabilising after a challenging winter. This resilience has helped inspire some spring shoots of optimism, with firms expecting an increase in sales for the first time since last September.
“The chancellor’s decision to back CBI calls to increase support for occupational health and expand childcare provision will help address some of the labour shortages that retailers are currently facing. However, these measures alone do not go far enough for the sector. In particular, more will need to be done to tackle retailers’ ongoing skills gaps, such as through transforming the Apprenticeship Levy into a more flexible Skills Challenge Fund.”
In addition, the latest survey data reported:
- Internet sales continued to fall at a firm pace in the year to March (-26% from -30% in February). Retailers expect a modest expansion in internet sales next month (+5%).
- Elsewhere in the distribution sector, wholesale volumes grew at a firm pace in the year to March (+18% from -28% in February). Wholesalers expect sales to remain broadly unchanged next month (+2%).
- Meanwhile, motor traders’ sales were unchanged in the year to March (0% from -15% in February), but are expected to decline again next month (-25%).