Retail sales volumes growth in the UK eased slightly in the year to September 2018 but remained broadly in line with the long-run average. That’s according to the latest monthly Distributive Trades Survey by the Confederation of British Industry (CBI).
The survey of 117 firms showed that sales volumes were in line with the average for the time of year, and are set to remain so next month. Orders placed on suppliers were unchanged in the year to September, and are expected to remain broadly flat next month.
Within the retail sector, growth in sales volumes was reported in the durable household goods, hardware and DIY, non-store (i.e. internet and mail order), and other normal goods subsectors. Meanwhile, sales volumes fell for the non-specialised (i.e. department stores), footwear and leather, chemists and recreational goods subsectors.
Year-on-year internet sales volumes expanded at a broadly average pace – for the third month running – in the year to September, and are expected to grow at a similar pace again next month.
Wholesalers report sharp pick-up
Elsewhere in the distribution sector, wholesalers reported a sharp pick-up in sales volume growth in the year to September, and they expect sales to grow at a similarly strong pace next month. However, motor traders reported unchanged sales volumes in the year to September, following four months of growth, and they expect them to remain unchanged in October.
Although the summer months seem to have provided a boost to retailers after a weak Q1, the CBI expects momentum to be relatively subdued going forward as firms continue to grapple with anaemic growth in real household earnings and structural changes such as digital disruption and new market entrants. For more information on the broader economic outlook, see the CBI’s latest economic forecast.
“Burden of business rates stifling investment”
Anna Leach, CBI Head of Economic Intelligence, said: “As we head into Autumn, retailers have seen the run of decent sales figures continue. But underlying conditions are clearly tougher, with the sector facing significant challenges – from squeezed household incomes and changing consumer habits to digital disruption.
“So, policymakers must be conscious that times are harder for retailers than recent data suggests. With the burden of business rates stifling investment – against the backdrop of an already tough trading environment – the Government must deliver a review of the system over the coming year.”
Key findings from the survey
- 31% of respondents reported that sales volumes were up on a year ago, while 9% said they were down, giving a rounded balance of +23% (from +29% in the year to August). This was broadly in line with the long-run average (+20%).
- Retailers expect sales growth to slow slightly next month (+19%), with 27% expecting them to rise and 8% to fall.
- Sales were broadly in line with seasonal norms in September, with a balance of -1%, and are set to remain so next month (-1%).
- The volume of orders placed upon suppliers was flat in the year to September, with 13% of survey respondents reporting a rise and 14% reporting a fall, giving a balance of -1% (from -19% in August). Firms anticipate that orders growth will remain unchanged next month (-2%).
- Year-on-year growth in internet sales volumes (+46% from +44% in August) remained in line with the long-run average in the year to September, with a similar rate of expansion expected next month (+45%).
- Growth in sales volumes was reported in the non-store (i.e. internet and mail order) (+26%), other normal goods (+40%), durable household goods (+33%), and hardware and DIY (+17%) subsectors.
- However, falling sales volumes were reported in the non-specialised (i.e. department stores) (-5%), footwear and leather (-15%), chemists (-18%) and recreational goods (-20%) subsectors.
56% of wholesalers reported sales volumes to be up on last year and 15% said they were down, giving a balance of +41%.
28% of motor traders reported sales volumes to be up on last year and 27% said they were down, giving a balance of +1%.
Is your business facing challenges from digital disruption? For advice on developing a successful digital strategy, email me or call me on 020 7099 2621.