Retailers 'feeling the chill' as sales volumes drop in run-up to Christmas, CBI warns

The CBI’s latest quarterly Distributive Trades Survey found retail sales declined in the year to November (-19 per cent from +18% in October) with a broadly similar fall expected next month (-21 per cent).

Sales volumes were seen as average for the time of year (+3 per cent from +20 per cent in October) and are expected to remain broadly in line with seasonal norms in December (-1 per cent).

Online retail sales contracted in the year to November (-5 per cent from -23 per cent in October).

Internet sales have now been flat or falling for 13 months, and an accelerated contraction (-26 per cent) is expected next month.

Retailers remained notably pessimistic about the business situation over the next three months (-22 per cent), to a similar extent to August (-22 per cent).

Employment growth in retail slumped in the year to November (-17 per cent from +13 per cent in August) – the first decline in headcount since August 2021. A further fall (-12 per cent) is anticipated next month.

Martin Sartorius, Principal Economist at the CBI, said: “It’s not surprising that retailers are feeling the chill as the UK continues to be buffeted by economic headwinds.

"Sales volumes fell at a firm pace in the year to November, and retailers remain notably downbeat about their future business prospects. This pessimism is reflected in investment intentions worsening to the greatest extent since May 2020.

“Retailers and wholesalers contribute £352bn to the UK economy and support a fifth of the nation’s jobs – yet these survey results underline what a tough time it is for the sector.

"The Chancellor’s decision to back CBI calls for a freeze in businesses rates next April will provide some welcome relief, but retailers are also looking for longer-term measures from Government that can restore momentum to the UK economy.

"Businesses stand ready to work with Government to implement a serious plan for growth that can lift us all out of the current crisis.”

In addition, data showed that selling prices rose extremely quickly in the year to November, at a pace just shy of the 37-year high recorded in the previous quarterly survey (+82 per cent from +87 per cent in August). Prices are expected to increase at a broadly similar pace next month (+81 per cent).