High street sales continue to fall
High street sales volumes fell on a year ago in November, for the sixth consecutive month, with retailers expecting another decline in December, according to the CBI. Meanwhile, retailers are reducing their headcount at the fastest rate in two years.
The CBI’s latest quarterly Distributive Trades Survey revealed that 26 per cent of retailers saw the volume of sales rise in the year to November, while 44 per cent said they fell. The resulting rounded balance of -19 per cent was weaker than expected (a balance of +4 per cent), and represents the fastest decline in sales since March 2009 (-44 per cent). Sales volumes were considered below average for the time of year, with a balance of -39 per cent, the weakest figure since March 2009 (-42 per cent). That was slightly weaker than October’s balance of -34 per cent. The decline in sales volumes was driven by pressure on grocers (-21 per cent), specialist food & drink stores (-51 per cent), department stores (-49 per cent) and clothing (-27 per cent). The volume of orders placed with suppliers fell in November (-25 per cent), at the fastest rate since March 2009 (-47 per cent). Orders are set to continue falling next month -18 per cent). Employment across the sector fell at the fastest rate since November 2009 (-27 per cent) in the year to November. The survey showed that 13 per cent of retailers increased their headcount, while 40 per cent reduced numbers, giving a balance of -27 per cent. Looking ahead to December, retailers expect the pace of decline in sales to ease somewhat (-6 per cent). Ian McCafferty, CBI chief economic adviser, said:
“Retailers remain hard-pressed, even as we get closer to Christmas. “The relatively mild weather this autumn has hit clothing stores particularly hard, and retail sales are down year-on-year for the sixth month in a row. “Retailers may be hoping that shoppers will loosen their purse strings in the run up to Christmas, but consumers are likely to remain cautious about spending given the uncertain economic outlook.” Price inflation on the high street remained well above average, with a balance of +56 per cent of firms saying average selling prices rose in November, and it is expected to stay at similar levels in December (+54 per cent). Retailers are scaling back investment plans over the next 12 months (-4 per cent), though to a lesser extent than in August (-16 per cent). A net balance of 8 per cent of retailers said they feel more negative about the business situation over the next three months than they did three months ago. Looking at wholesalers, sales volumes growth turned negative in November (-13 per cent) and they expect sales volumes to decline at the same rate next month. The three-month moving average, which smoothes out volatility, was flat (+3 per cent) and is expected to remain so next month (-1 per cent). Average selling prices rose rapidly on a year ago (+48 per cent). In motor trades, the volume of sales declined steeply (-45 per cent) albeit at a slower pace than October (-55 per cent). Sales volumes are expected to continue falling at a faster rate next month (-52 per cent).
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