High street remains subdued as economic slowdown takes grip
Retail activity remained subdued in March with high street stores reporting flat year-on-year sales according to the latest CBI Distributive Trades Survey.
About a third (36%) of retailers told the business organisation their sales volumes in the first half of the month were higher than a year earlier while 35% said they were lower. The resulting balance of +1 was marginally better than retailers’ expectations (-2), which followed February’s figure of -3, the first negative balance since November 2006. The three-month moving average, which smooths out blips and monthly volatility, continued its gradual fall from its peak of +36 last May to +1 this month. Unsurprisingly given this slowdown, retailers described sales for the time of year as poor (29% compared to 15% saying they were good, a balance of -14).
And retailers reported their stock volumes were more than adequate, relative to expected demand, and they have ordered less new stock from suppliers than a year ago. Breaking the sector down, shoes and leather goods were the most in demand with a balance of +58 of retailers reporting year-on-year sales rises. Grocers continued to grow (a balance of +29, broadly in line with the 12 month average) and booksellers and stationers had a good month too (+17, up from -19 last month).
However, reflecting continued belt-tightening for big ticket items, durable household goods saw the fifth consecutive month of shrinking annual sales (a balance of -77). Looking ahead to next month, retailers across the sector expect activity to remain subdued with volumes expected to be broadly the same as last April. Orders to suppliers are also expected to remain lower than the same time last year as retailers expect sales for the time of year to be poor.
Ian McCafferty, CBI chief economic adviser, said: “This month’s survey has borne out retailers’ expectations that the strong growth enjoyed in 2007 has come to an end. “The picture now is of subdued activity as consumers tighten their belts amid the general cooling of activity we are seeing across the whole economy. “One area which saw good growth was the food sector – perhaps because people are preferring to treat themselves at home instead of eating out. “However sales of bigger items, especially white goods, continued to fall, as the slowdown in the housing market and tightening of credit takes hold.” Wholesalers also saw a fall in sales volumes on a year ago, but the balance of -4 was a lot stronger than the three previous months and far higher than expectations (-35).
However they are bracing themselves for a further decline in sales next month (a balance of -20). Conversely, motor traders reported healthy annual sales growth for the second month in a row, coinciding with the introduction of the new registration plate at the start of March. Expectations for April are upbeat with further year-on-year growth predicted (a balance of +10).
