Poor weather continues to dampen retail sales - CBI Distributive Trades Survey

Retail sales volumes fell at an accelerated rate in the year to July, according to the latest CBI Distributive Trades Survey. This marked the second consecutive month in which annual sales declined, with retailers citing unfavourable weather conditions and market uncertainty as key contributing factors.

Looking ahead, retailers are expecting the sales downturn to continue in August, though at a slower pace.

Key findings included:

• Retail sales volumes fell at a faster pace in the year to July compared to June (weighted balance of -43% from -24% in June). Retailers expect sales to fall at a slower rate next month (-32%).
• Retailers continued reporting disappointing sales for the time of year (-36% from -39% in June). Sales volumes are expected to remain below seasonal norms in August, albeit to a lesser extent (-21%).
• Orders placed upon suppliers in the year to July fell at a much faster pace compared to last month (-40% from -14% in June). Retailers expect the cutback in orders to continue next month at a broadly similar pace (-38%).
• Stock positions were at their most elevated since June 2023 (+32% from +3% in June). Retailers expect stocks to remain “too high” in relation to expected sales next month (+21%).
• The total distribution sector (includes retail, wholesale, and motor trades) reported its quickest decline in annual sales volumes since the start of the year (-30% from -9% in June). Sales are set to contract at a broadly similar rate next month (-27%).
• Wholesale sales volumes contracted at a firm pace in the year to July (-21% from -12% in June) and are expected to fall at a broadly similar rate next month (-19%).
• Motor trades sales volumes fell in the year to July (-29% from +42% in June), at the fastest pace since May 2023, and are expected to contract at a quicker rate next month (-42%).

Martin Sartorius, Principal Economist, CBI, said:

“July marked a disappointing month for the distribution sector, with retailers feeling the sting from a harsh mix of unfavourable weather conditions and ongoing market uncertainty.

“While the downturn in sales volumes is set to continue next month, some firms expressed hope for an improvement in market conditions post-general election. The sector will now look for the new government to deliver on its bold reform agenda outlined in the King's Speech to supercharge growth to effectively aid households' finances and offer market stability."