Retail remains tough but firms more positive

Retail sales fell again in the year to May, following a brief pause in April, the CBI said today.
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This month’s decline in sales was in line with retailers’ expectations and, other than in April, when Easter and good weather boosted sales, was the least negative result in nearly a year.

At the same time, retailers’ sentiment about general business prospects was the least negative for over a year.

In the latest CBI Distributive Trades Survey, 31 per cent of retailers said year-on-year sales volumes were up in the first half of May, while 48 per cent said they were down.

The resulting balance of -17 per cent was close to retailers’ expectations, which were -15 per cent.

Sales for the time of year were reported to be poor by 36 per cent of retailers, though they have slightly less negative expectations for June of -20 per cent.

The three-month moving average of sales volumes, which smoothes out monthly peaks and troughs, remained weak with a balance of -19 per cent, but was the least negative figure for nearly a year.

24 per cent reported a year-on-year fall in orders placed upon suppliers and, other than in April, is the least negative since June 2008. The balance of eight per cent of firms said stocks were more than adequate to meet demand is the lowest since June 2007.

Employment conditions remained difficult in May, with a balance of 29 per cent reporting they had reduced headcount. Though weak, this was more positive than February, when it was -49 per cent, the lowest since the survey began in 1983.

When asked about the general business situation facing retail, the balance of firms expecting it to deteriorate - eight per cent - was the least negative since November 2007, when it was one per cent.

Ian McCafferty, the CBI’s chief economic adviser, said: “Retailers are less pessimistic about their general business situation, and the decline in demand now appears to be slowing compared with the turn of the year. However, with unemployment still rising, conditions will remain tough.”

Andy Clarke, chairman of the CBI Distributive Trades Panel, and chief operating officer of Asda, said:

“Conditions were tough again in May for retailers, proving April’s better sales figure was a temporary blip. Trading conditions are expected to remain difficult in June.

“The harsh reality is consumers need good reason to part with their hard-earned cash. Demonstrating you offer value for money as a retailer has never been more important, and marks out the true survivors.”


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