By Jeremy Priestley, Managing Partner at The P&A Partnership
October 2008
Sales on the UK high street fell for a seventh consecutive month and retailers see no respite in November, the CBI has said.
Responding to its latest Distributive Trades Survey, half of all retailers (50%) said that the volume of sales in the first half of October was down on last year, and 23% said they were up.
The resulting balance of -27% matches September's rate of decline and was in line with firms' expectations. No improvement is anticipated in November, with a balance of 25% expecting sales to fall.
The three-month moving average of sales volumes, which smoothes out monthly volatility, remained firmly negative with a balance of -33%.
A balance of 35% of firms said their volume of sales for the time of year was poor, and November's outlook remains weak (-31%).
Suppliers continued to be hit by the knock-on effect of weak demand in the shops, as a balance of 36% of retailers reported a year-on-year fall in the volume of orders placed upon suppliers. However, the rate of decline has eased slightly over the past two surveys and is expected to do so again in November (-30%). A balance of 17% of firms said stock levels are more than adequate to meet expected demand.
The majority of sub-sectors saw sales decline sharply compared to a year ago, although footwear, leather and hardware, china and DIY retailers reported an increase in sales. Grocers, including the major supermarkets, saw more modest sales growth.
Andy Clarke, chairman of the CBI Distributive Trades Panel, and retail director of Asda, said: "Shoppers face competing pressures on their wallets and are spooked by worries over job losses and the slowing economy.
"Retailers have had another tough month and, while there are some winners, the majority are suffering. The sector looks set to endure a very challenging run-up to Christmas.
"We are hoping the recent drop in interest rates will cut consumers and business some slack as it feeds through to the wider economy."
Wholesalers found this month much tougher than September, and a balance of 32% of firms said that sales volumes were down over the year to October. They predict the situation will worsen, and a balance of 43% expects sales to fall in November.
Motor traders continued to experience difficult conditions. The balance of 87% of firms reporting a fall in sales volumes was in line with expectations, and marks the fourth month of heavy declines. The weak demand hit sales of vehicles more than parts and accessories. The outlook for November is similarly weak, with sales set to fall at a significant pace again.
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