• Linkdin

Slow growth in retail sales of clothing

06 Apr '11
3 min read

High street trading grew in March compared with a year ago, and at a faster rate than last month, but sales growth remains subdued, the Confederation of British Industry - CBI said.

The CBI's latest Distributive Trades Survey (conducted 28th February to 16th March) shows that 42% of retailers saw their volume of sales rise in the year to March, while 27% said they fell. The resulting balance of +15% exceeded retailers' expectations of zero growth. Meanwhile, retailers anticipate little change in the pace of sales growth next month (+18%).

Sales in March were considered poor for the time of year, with 16% of retailers reporting sales as good, and 40% saying they were poor. The balance of -24% is the lowest figure since August 2009 (-25%). Retailers anticipate that sales will continue to underperform against seasonal norms in April (-16%), albeit to a slightly lesser extent.

At +19%, the three-month moving average of volume of sales growth was at its lowest rate in eight months, considerably down on February's figure of +33%. If expectations are realised, it will decline further next month (+14%).

The figures for March show that, for the first time in nine months, orders placed by retailers with suppliers were down (a balance of -8%) when compared with the previous year. This was broadly in line with expectations (-7%). Retailers anticipate that orders will be largely unchanged in the year to April (-2%).

The volume of stocks in relation to expected demand (+23%) was well ahead of retailers' predictions for March (+12%), and was higher than the long-term average (+18%) for the fourth consecutive month.

Ian McCafferty, CBI Chief Economic Adviser, said:

“Sales growth picked up slightly for retailers compared with last month, but look beneath the surface and conditions remain tough on the high street. Even the best performing sectors – namely grocers and clothing – have seen a slowing trend.

“With inflation edging higher and earnings growth only modest, household budgets are under increasing pressure. Consumer demand will remain weak in the coming months.”

Nine of the 13 retailing sub-sectors saw an increase in year-on-year sales growth this month. However, sales in the grocers sector rose (a balance of +39%) at the slowest rate in two years (+7% in March 2009). Growth in sales of clothing also slowed further compared with last month (+22% from +34%), however these two sectors remained among the best-performing.

Judith McKenna, Chair of the CBI Distributive Trades Panel and ASDA Chief Financial Officer, said:

“Retailers are working harder than ever to attract more customers through their doors by delivering value where they can. There's no doubt, however, that people are feeling the squeeze as the cost of everyday commodities rises faster than incomes.

“The sharp rise in inflation also means fewer people are able to splash out on major items fortheir homes, such as consumer durables, hardware and DIY.”

Among wholesalers, sales volumes grew at a robust pace on a year ago for the third consecutive month. Half of wholesalers who responded to the survey said volumes were up on March last year, and 9% said they were down, giving a balance of +41%. However, much slower sales volumes growth (+19%) is anticipated by wholesalers next month.

Confederation of British Industry - CBI

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