Business lobby group finds first retail sales growth for seven months but little cheer in December

Business lobby group finds first retail sales growth for seven months but little cheer in December

Retail sales volumes grew in the year to December for the first time in seven months, though sales were considered poor for the time of year, the Confederation of British Industry (CBI) said today.

Publishing its latest monthly Distributive Trades Survey, which covers the first two weeks in December, the UK business organisation said retailers did not expect December’s modest sales growth to continue into the New Year, with annual sales volumes falling again in January.

While 41% of companies said sales rose on a year ago in December, 32% reported a fall, giving a balance of +9%. This was better than expected, and the first year-on-year sales growth since May (+18%).

However, volumes of sales were poor for the time of year, with a balance of -16% well below the long-run average. The three-month moving average, which smoothes out monthly peaks and troughs, was negative for the fifth month running (-7%) and is expected to remain so in January.

Online proves saving grace again

The organisation reported that there was a mixed picture across the sub-sectors, albeit with some notable improvements.

Grocers saw their sales volumes rise on a year ago (+52%), as did recreational goods, which includes sports equipment, toys and games (+44%) and the non-store category (+91%), which takes in mail order and online. Non-specialised retailers, such as department stores, posted better sales this month (+1%) following four months of decline.

Sales volumes fell on a year ago, however, for all sellers of big-ticket durable household goods (-100%), which include washing machines and fridges. Hardware and DIY stores fared little better (-70%), although sales of furniture & carpets grew (+43%) for the third month running. Footwear & leather goods fell (-77%), while sales of clothing were merely flat at 0%.

New Year outlook gloomy

Judith McKenna, CBI Distributive Trades Panel chair and ASDA chief financial officer, said:

“Early discounting helped retailers add a little extra sparkle to their sales in December, although the reprieve appears to only be temporary as they don’t expect sales to continue to grow into January.

“Consumers are continuing to hold off on purchasing big-ticket items, including durable household goods, preferring to use their hard-earned cash to stock up for Christmas dinner and all important gifts for the family.”

The volume of orders placed on suppliers was broadly flat (-4%) on a year ago in December, having fallen fast in November (-24%). Among wholesalers, 52% saw sales volumes rise, while 9% reported a fall, giving a balance of +42%. Sales are expected to be broadly flat in January (-2%).

Motor traders have seen sales fall for an entire year, with a balance of -47% in December, with further negative expectations for the New Year (-53%).

The survey was conducted between 28 November and 12 December 2011. In all, 136 firms took part, of which 72 were retailers, 50 were wholesalers and 14 motor traders.