UK retailers brace for sharper sales decline in March: CBI

The outlook remains bleak, as retailers anticipate an even steeper decline in March.

The survey revealed that sales volumes fell at a weighted balance of -23 per cent in February, closely mirroring January’s decline of -24 per cent. Expectations for March are even more pessimistic, with retailers forecasting a sharper -30 per cent drop.

Beyond declining sales, retailers are increasingly cautious about their future business prospects. The survey indicates that investment intentions for the next 12 months have deteriorated to their lowest level since May 2019 (-56 per cent from -27 per cent in November). Retailers plan to cut jobs at a steady rate, with headcount expected to decline by -15 per cent in March, following a -13 per cent drop in February.

Retailers described sales for the time of year as ‘poor’, with the assessment worsening to -34 per cent in February from -24 per cent in January. Despite this, the decline in March is expected to be slightly less severe (-27 per cent), the CBI noted.

In a broader context, total distribution sales—including retail and wholesale—continued to decline, though at a slower pace than in January. The wholesale sector saw a moderate drop in sales volumes (-19 per cent in February from -30 per cent in January).

The downturn has also hit online retailers, with sales volumes declining at an accelerated rate of -28 per cent in February compared to -22 per cent in January. A similar rate of decline is expected in March (-29 per cent).

Retailers have also been cutting back on orders placed with suppliers, with a sharp reduction of -38 per cent in February. Orders are expected to be cut back even more steeply in March, dropping to -47 per cent—the weakest expectations since March 2021.

Despite the challenging retail environment, selling price inflation remains relatively subdued compared to historical levels. The latest figures show inflation at +25 per cent in February, marginally up from +24 per cent in November, but still below the long-run average of +41 per cent. Retailers expect prices to rise at an unchanged rate in March.

“February marked another month of falling annual sales in the retail sector. This trend of poor business conditions extended across the broader distribution sector, with wholesalers and motor traders also reporting a drop in sales. Looking ahead, retailers expect a sharper sales downturn in March, partly due to the later timing of Easter compared to last year, said Martin Sartorius, principal economist, CBI.

“Businesses need a boost in confidence after a tough period that has seen their overheads increase and headroom for investment squeezed. Reforming business rates and the Apprenticeship Levy would go a long way to support firms as they work alongside government to create the jobs, investment, and growth that we all want,” Sartorius added.

ALCHEMPro News Desk (HU)