Retail sales slightly below normal, but orders up says CBI

Retail sales dropped slightly below normal in the year to February, but orders remained above expectations, according to the CBI's latest quarterly Distributive Trades Survey.

The survey of 124 firms consisting of 68 retailers showed that retail sales growth slowed slightly in the year to February, in line with expectations and was a little below average for the time of year. Meanwhile, orders placed on suppliers were unchanged, better than expectations. However, expectations for March are the weakest since 2013, with sales expected to be flat on the year.

Respondents expect a decent improvement in business conditions (which considers recent trends in sales, orders and profitability) over the next three months. Average selling prices crept up for the first time in three quarters, easing pressure on retailing margins. And although recruitment growth slowed, it remained well above average rates with a similar rise expected next month.  

But retailers now plan to slightly scale back investment spending in the year ahead, following two quarters when firms expected to raise capital spending. 

Meanwhile, grocers’ expectations for growth for the month ahead fell to their weakest in nearly three years, as tough trading conditions continue to exert pressure on the sector.

Garden centres saw poor sales in plants, bird care and winter fuels this January and February but many saw improved sales in clothes and food.

Rain Newton-Smith, CBI Director of Economics said: "Overall, conditions remain challenging for retailers. Although sales have continued to grow and optimism has risen, expectations for sales growth are lacklustre and retailers are still wary of investing. And unreformed business rates are making it tougher for retailers to open up new shops on the high street.

"But retailers still stand to benefit from the low level of inflation and strong job creation across the economy, which should continue to support household spending."

  • The volume of internet sales (+29 per cent) remained far below its long-run average (+50 per cent - since August 2009).
  • 38 per cent of respondents reported that sales volumes were up on a year ago, while 28 per centsaid they were down, giving a balance of +10 per cent, matching expectations (+10 per cent).
  • Retailers expect sales volumes growth to dip next month (+2 per cent), the lowest for almost three years (-6 per cent in May 2013), with 25 per cent expecting them to rise and 23 per cent to fall.

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