Retail sales expected to stabilise as restrictions ease

Retail sales volumes fell in the year to November, but online sales rose at the fastest pace in two years according to the latest CBI quarterly Distributive Trades Survey. The survey of 114 firms – including 57 retailers – found that overall retail sales volumes fell in the year to November at a similar pace to the previous month. However, internet sales grew at the fastest pace since October 2018, suggesting a substitution in spending away from in-store retailing during the month-long lockdown in England from 5 November, which closed all non-essential retail stores.

Against a backdrop of sequential lockdowns across the UK, the overall level of sales was seen as below average for the time of year to the greatest degree since June. Looking ahead, retailers expect sales volumes to be broadly flat in the year to December, with the current English lockdown due to end on 2 December.

Meanwhile, retailers reported that employment fell further in the year to November, but the pace of decline eased compared with August, with a similar fall expected in the year to December. Investment intentions for the year ahead remain negative, but less so than in August or May. Overall, retailers’ sentiment about the general business situation over the next three months deteriorated, following a slight improvement in August.

Ben Jones, CBI principal economist, said: “This month’s survey gives hope that the economic impact of the Autumn lockdowns should not be as severe as in the Spring. Both consumers and firms are adapting as best they can, borne out in this month’s strong online sales.

“For many retail sectors, particularly those with less of an online presence, conditions remain extremely challenging. Retailers will be looking to salvage what they can from a very difficult year and many will be greatly relieved by the announcement that they can re-open over the crucial Christmas trading period. With encouraging progress on mass, rapid testing and vaccine solutions coming down the track, there is reason for growing consumer and business confidence going into 2021.”

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