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News : UK Economy Last Updated: Dec 19, 2012 - 1:13 PM


Retail sales on the UK high street slowing in December
By Finfacts Team
Dec 19, 2012 - 1:10 PM

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Chelmsford's High Street.

The festive season has lost some of its sparkle for retailers, with growth in sales on the UK high street slowing in December, the CBI said today.

The Confederation of British Industry is the UK biggest business lobbying group.

Responding to the CBI’s latest monthly Distributive Trades Survey during the first two weeks of December, 36% of retailers reported an increase in volume of sales compared to a year ago, and 17% a decrease. The resulting balance of +19%, though broadly in line with the long-run average (+21%), matched neither the stronger increases in sales volumes seen in the previous two months (+30% and +33%), nor retailers’ expectations (+25%). As a result, retailers considered sales volumes to be below average for the time of year (-18%), disappointing expectations that they would be in line with seasonal norms (-1%).

In contrast to slowing sales growth, orders placed by retailers upon suppliers rose (+13%) at a similar pace to last month year-on-year (+16%).

Sales growth is expected to continue losing steam next month, with retailers expecting a slower rise once again in the year to January (+10%), while orders placed on suppliers are expected to be flat in the coming month (0%).

Stocks levels fell back relative to expected demand (+9%), with stock adequacy at its lowest in three months. A similar degree of stock sufficiency is expected next month (+10%).

Looking in more detail at the retail sectors, grocers recorded their eighth consecutive month of rising year-on-year sales (+42%), while clothing also saw sales growth pick up (+39%). A few other sectors reported a rise in sales, including chemists (+23%) and furniture & carpets (+42%), but at a slower rate than in November. The picture was less buoyant for shops selling big-ticket items for the home (durable household goods: -58%), while shops selling footwear & leather also saw falling sales (-9%) for the second month running.

Anna Leach, CBI Head of Economic Analysis, said: “This month’s survey hasn’t quite provided the Christmas cheer that retailers anticipated, with sales growth falling short of expectations.

“Clearly, weak spending power and uncertainty over the economic outlook are likely to remain key risks to the retail sector in 2013.”

Judith McKenna, chair of the CBI Distributive Trades Panel and Asda chief operating officer, said: “This latest data covers the period to the middle of December and we should take heart that sales on the high street have held up during the early crucial Christmas shopping period. However, on-going economic fragility is maintaining the squeeze on household incomes, and it’s notable that sales are below par for the festive season.

“So while families are making their budget stretch as far as possible for the Christmas season, the Christmas spending spirit can only go so far. In reality, sales growth has actually slowed since the Autumn and retailers are expecting a further slowdown in the New Year.”

This month, the wholesale sector saw its fastest year-on-year sales growth (+53%) since September 2007 (+67%), greatly exceeding wholesalers’ expectations of broadly flat growth (+3%). A further, but more modest rise in sales is expected in the month ahead (+12%).

Meanwhile, motor traders reported flat sales volumes (0%), in line with expectations (-3%), after two months of year-on-year growth. However, sales are expected to rise once again in January (+18%).

The December 2012 CBI monthly Distributive Trades Survey was conducted between 29th November and 12th December. 108 firms replied, of while 63 were retailers, 35 were wholesalers, and 8 were motor traders.

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