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January sales setback leaves retailers downbeat on sector's prospects - CBI Distributive Trends Survey

25 January 2024

Retail sales fell in the year to January at the sharpest pace in three years, according to the latest monthly CBI Distributive Trades Survey. This month’s decline extends a downturn in sales that stretches back to April 2023.

Looking ahead, the slump in retail sales is expected to continue at the same rapid pace next month.

The key survey findings included:

  • Retail sales fell in the year to January at the sharpest pace since January 2021 (weighted balance of -50% from -32% in the year to December). Sales volumes are expected to continue falling at the same rate next month (-50%).
  • Retailers continued to see sales as poor for the time of year in January, with volumes falling short of seasonal norms to the greatest extent since May 2020 (-47% from -25% in December). Retailers expect sales to disappoint to a lesser degree next month (-31%).
  • Orders placed upon suppliers declined in the year to January, but at a slower pace than last month (-36% from -54% in December). Retailers expect the cutback in orders to continue at a broadly similar pace next month (-35%).
  • Retailers continued to see stocks as “too high” relative to expected sales in January (+15% from +10% in December). Stock positions look set to soften slightly next month (+9%).

Martin Sartorius, CBI Principal Economist, said:

“Retailers reported a further deterioration in activity at the start of 2024. Year-on-year sales volumes fell at the fastest pace since the pandemic, and retailers anticipate a similar rate of contraction next month.

Looking ahead, demand conditions in the sector will remain challenging as higher interest rates continue to feed through to mortgage payments and household incomes. Against this difficult backdrop, the forthcoming hike in business rates, together with a rise in the National Living Wage, will come as a significant blow to many retailers at a time when firms are least capable of bearing the burden of higher costs.”