Stockpiling props up UK retail sales in March, but volumes expected to slide

UK retail sales were flat overall in the year to March 2020, but this masked a sharp divergence between sectors. That’s according to the latest monthly Distributive Trends Survey by the Confederation of British Industry (CBI). The survey was conducted between 26 February and 13 March 2020.

Grocers reported exceptionally strong growth in sales volumes in the year to March, as did specialist food and drink firms. However, most other sectors – including clothing, furniture and “other normal goods” such as flowers, jewellery and cards – reported sharp falls in sales volumes.

The results of the survey suggest that while households are stockpiling groceries in response to the spread of the coronavirus and the introduction of social distancing, they are putting off purchases of non-essential items. In line with this, non-store retailers reported a fall in sales volumes, while internet sales growth slowed to a below-average pace.

Retailers at their most pessimistic since 2009

Looking ahead, retail sales volumes are expected to fall sharply in the year to April, with retailers more pessimistic than at any time since April 2009. This reflects a continued fall in volumes across most sectors. Grocers expect sales to be stable over the year.

Orders placed upon suppliers fell for the eleventh consecutive month, despite a strong rise in orders placed by grocers. Orders are expected to fall across most sectors (including grocers) in the year to April, with expectations the weakest since April 2009.

Sales were seen as poor for the time of year, but to a lesser extent than last month. Next month, sales are expected to be poor for the time of year – to the greatest extent since February 2009.

“Extraordinary times for the retail sector”

CBI Principal Economist Ben Jones commented: “These are extraordinary times for the retail sector. Grocers are seeing a temporary increase in demand because of coronavirus. But many other retailers are seriously suffering as households put off non-essential purchases and social distancing keeps people away from the High Street.

“The Government and Bank of England have already taken welcome, substantial steps to support business during this unprecedented period. What’s needed now is clarity over the support available to firms and fast action to ensure measures announced last week are accessible to businesses of all sizes.”

In other survey results, wholesalers reported a robust increase in sales volumes, with above average growth expected to continue in the year to April. Food and drink wholesalers reported particularly strong growth in the year to March, with further rapid growth expected next month.

Meanwhile, motor traders reported a fall in sales volumes in the year to March, following three months of flat or rising sales. Sales are expected to fall again in the year to April.

Click here for full details of the survey findings.

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