UK retail sector's sales volumes drop sharply in December 2023

The survey's key findings reveal a steep drop in retail sales volumes, which fell at a faster pace than in the previous month, with a weighted balance of minus 32 per cent compared to minus 11 per cent in the year to November. Retailers are bracing for an even sharper contraction next month, expecting sales volumes to decline at a rate of minus 41 per cent.

December also saw sales volumes considered well below average for the time of year, deteriorating further from the previous month (minus 25 per cent from minus 16 per cent in November). The outlook for January is similarly bleak, with volumes expected to fall significantly short of seasonal norms (minus 37 per cent), as per the survey.

Retailers have responded to the challenging environment by reducing orders placed on suppliers, with the pace of cutbacks reaching its fastest since May 2020 (minus 54 per cent from minus 22 per cent in November). However, there is a slight expectation of improvement next month, with the reduction in orders anticipated to soften (minus 29 per cent).

The survey also indicates that retailers judged stock volumes to be too high relative to expected sales in December (10 per cent from 13 per cent in November), with stock positions expected to remain broadly unchanged in January (11 per cent).

Additional data from the survey showed that internet sales volumes declined firmly in the year to December (minus 41 per cent from minus 39 per cent in November), with a continued downward trend expected next month (minus 41 per cent). The distribution sector as a whole, including wholesale, also faced challenges. Wholesale volumes declined quickly in December (minus 24 per cent from minus 11 per cent in November), though the pace of contraction is expected to slow slightly next month (minus 18 per cent).

Fibre2Fashion News Desk (DP)