Fall in High Street sales slows but job cuts rise
Retail sales fell heavily in the year to February but were not as weak as in the last survey, while jobs in the sector were lost at a record rate, the CBI said today.
Although investment plans and business sentiment remain very weak, the latest sales figures were not as poor as retailers had feared. And not all sectors fared badly – supermarkets, footwear and leather shops enjoyed strong sales growth in February. In the CBI’s latest Distributive Trades Survey, 27% of retailers said year-on-year sales volumes rose in the first half of February, while 52% said they were down.
The resulting balance of -25% marked a fall in sales, but was not as severe as January (-47%) and was significantly better than expected (-52%). The decline in sales is expected to worsen slightly in March (-33%).
Sales for the time of year were reported to be poor by a net 39% of retailers, and are set to remain at a similar, below-average rate in March. The three month moving average of sales volumes, which levels out monthly peaks and troughs, remained weak (a balance of -42%).
The movement in sales volumes was mirrored by the volume of orders placed upon suppliers, which fell over the year to February (a balance of -31%), but at a slower pace than January. A balance of 19% of firms said stock levels are more than adequate to meet expected demand, which was the same balance as in January.
The quarterly questions showed that employment conditions worsened sharply over the year to February, and a balance of 49% of retailers said they had cut their headcount, which was the lowest since the quarterly survey began in August 1983. A similar record rate (a balance of -45%) of employment reduction is expected for March.
A balance of 38% of retailers reported increases in average selling prices over the year to February, and a slight easing in this rate is expected in March (+35%).
Retailers’ confidence in their sector remains low, with a balance of 26% expecting the retail business situation to worsen over the next three months. Investment intentions remain very weak (a balance of -44%) but are not as bleak as November (-57%).
Examining the sectors within the retail industry, grocers reported a strong improvement, with a balance of 60% reporting an increase in sales volumes on a year ago. Footwear & leather sales also grew (a balance of 39%). Sales volumes contracted heavily elsewhere, particularly for hardware, china & DIY, durable household goods, books and clothing.
Andy Clarke, Chairman of the CBI Distributive Trades Panel, and Chief Operating Officer of Asda, said: “February was another tough month and sadly many retailers are cutting jobs as shoppers stay away and the recession deepens. But conditions were not quite as harsh as they were last month and in the run up to Christmas.
“Supermarkets and footwear and leather shops enjoyed some pretty strong growth, proving that, as the flight to the value end of the market continues, those with the right offering can fare well during these tough times.
“March looks similarly testing but we hope that, as the year goes on, lower interest rates and falling inflation will encourage a pick-up in spending.”
