Slowest high street sales growth for over a year in early December
And January’s sales won’t lift demand say retailers.
Retailers recorded the weakest sales growth in over a year during the critical first fortnight of the build-up to Christmas, the CBI’s December Distributive Trades Survey revealed today.
Firms are also pessimistic about their fortunes in the New Year, with the balance of retailers expecting sales in January to be down on a year ago. While 42 per cent of firms saw sales volumes grow year-on-year in the first half of December, 33 per cent said they had fallen. The balance of +8 per cent is the weakest since November 2006 and the fourth month in a row when sales growth disappointed expectations. In the CBI survey of retailers, the three-month moving average which smoothes out monthly peaks and troughs slowed slightly from a balance of +12 per cent in October and November to +10 per cent.
Retailers consider sales to be slightly under par for the time of year (a net balance of 5% described them as ‘poor’).The survey was conducted in the early build-up to Christmas, between 29 November and 12 December, so a late dash to the shops could boost retail sales for the month as whole. However, more retailers expect sales to be down in January compared with a year ago, with the balance of -5 per cent the first negative expectation since April 2006 (-7%). Asked to judge the expected demand for the time of year, a net balance of 16 per cent thought sales next month would be poor, the weakest forward-looking figure since the start of 2007.
Stock levels were much higher relative to expected demand this month. The balance of +24 per cent is above the long-term average of +18 per cent for the first time this year. With stock levels high, growth in orders with suppliers has fallen back. Having remained firm throughout 2007, orders grew only modestly in the year to December (a balance of +6%) and are expected to fall in January (a balance of -9%). The weaker sales picture is borne out across the sectors. Where there was sales growth, the best figures were achieved by grocers (a balance of +32%), and specialist food shops such as delicatessens (a balance of +56%).
At the end of a very strong year for footwear & leather retailers, sales fell sharply on a year ago (a balance of -87%). After picking up in November, booksellers & stationers also reported a negative start to December (a balance of -43%). Falling sales continued to be reported by sectors related to the housing market, such as furniture & carpets (a balance of -11%), durable household goods (-7%) and hardware, china & DIY (-4%).
John Longworth, chairman of the CBI’s distributive trades panel and executive director of Asda, said “We’re coming to the end of what’s been a successful year for many on the high street. So, sales growth in the first part of December seems relatively more disappointing when compared with last year’s pre-Christmas period and the first half of 2007. “Retailers will be hoping that shoppers plan to fill their stockings late, especially as Christmas falls soon after the weekend this year. But the outlook for January does not fill them with cheer as they expect a slight fall in sales.
“Maintaining consumer confidence is vital, at a time when the extent to which tighter borrowing and the impact of the credit crunch will bear down on people’s pockets is still not fully known. Consumer spending will certainly slow next year but the overall economy will stay in reasonable shape.” In the more volatile wholesale sector, sales volumes were reported to have fallen in December (by a balance of -42%). This was unexpected and the three-month moving average, which gives a better picture of the sector, shows sales continuing to grow albeit at a slow pace (a balance of +7%).
