Retail off to a slow start in 2023 with sales volumes down in January – CBI Distributive Trades Survey

Retailers began the year on a disappointing note, reporting that sales volumes fell at a fast pace in the year to January, according to the CBI’s latest monthly Distributive Trades Survey. Sales are expected to decline again next month, but at a slightly slower pace.

The key survey findings included:

• Retail sales volumes fell at a fast pace in the year to January (-23% from +11% in December). Sales are expected to fall again next month, but at a slower rate (-15%).
• Retail sales in January were seen as broadly typical for the time of year (-3% from -3% in December). Retailers expect sales to remain in line with seasonal norms again next month (-2%).
• Orders placed upon suppliers were down sharply in the year to January (-32% from -21% in December). Orders are expected to fall again in February, but at a slower pace (-19%).
• Retailers viewed stocks in January to as elevated relative to expected sales, and to a greater extent than last month (+23% from +16% in December). Stock positions are expected to ease next month, but to remain “too high” (+12%).

Martin Sartorius, Principal Economist at the CBI, said:

“Retailers began the new year with a return to falling sales volumes, as the sector continues to face the twin headwinds of rising costs and squeezed household incomes.

With consumer spending expected to fall throughout 2023, it’s important that the Government addresses the structural problems holding back retailers. Reforming business rates and the Apprenticeship Levy would unlock much-needed investment and help the UK avoid getting stuck in a rut on growth.”

In addition, the latest survey data showed:

• Internet sales volumes declined in the year to January, but at a slower pace than last month (-4% from -22% in December). Sales are expected to grow next month (+4%), which is the first month with expected sales growth since December 2021.
• Elsewhere in the distribution sector, wholesale sales volumes fell in the year to January (-18% from -14% in December) and are expected to decline at an accelerated rate next month (-22%).
• Motor traders’ sales continued to fall quickly in the year to January (-34% from -25% in December), but the pace of decline is expected to ease next month (-11%).