Sentiment among retailers nosedived in November - CBI Distributive Trades Survey

Sentiment amongst retailers about their business situation over the next three months fell at the fastest pace for two years in November, according to the CBI’s latest quarterly Distributive Trades Survey.

Retail sales volumes declined moderately in the year to November, with retailers judging sales to be “poor” for the time of year, to a similar extent as the previous month.

Looking ahead to December, retailers expect annual sales growth to deteriorate. Volumes are set to remain below seasonal norms next month, albeit to a lesser extent than in November, with retail firms anticipating a rise in online sales.

Weak consumer demand and falling confidence in their business situation is reflected in retailers’ investment plans. Firms expect to scale back capital expenditure for the next 12 months (compared to the past 12 months). Employment in the retail sector fell in the year to November at the slowest rate for a year, though retailers expect headcount to be broadly unchanged in the year to December.

Key findings included: 

Retail sales volumes declined at a moderate pace in the year to November (weighted balance of -18% from -6% in October). Retailers expect sales to decline at a faster pace next month (-29%).

Sales volumes for the time of year were judged to be “poor”, to a broadly similar extent as in October (-22% from -25% in October). Sales are set to remain below seasonal norms in December (-15%), albeit to a lesser extent.

Sentiment amongst retailers about their business situation over the next three months further weakened in November (-21%, from -13% in August, and the weakest balance since a reading of -22% in November 2022).

Retailers expect to reduce investment in the next 12 months (compared to the past 12), though to a lesser extent than in August (-27% from -35% in August).

Retail employment declined in the year to November at the slowest rate since November 2023 (-18% from -25% in August). Headcount in retail is expected to be broadly unchanged in December (-2%).

Selling price inflation eased in the year to November (+24% from +30% in August), remaining below the long-run average for the third consecutive quarterly survey (+41%). However, retailers expect this measure to accelerate next month (+33%).

Volumes across the distribution sector (which includes retail, wholesale and motor trades) contracted at a moderate pace in the year to November (-17% from -12% in October). Firms expect sales to fall at the same pace in December (-17%).

Ben Jones, Lead Economist, CBI, said:

“Retailers continue to report disappointing sales, though trading conditions have shown some improvement since the middle of the year. Yet the last time retailers felt this gloomy was back in November 2022, at the peak of the inflation shock. This makes the sharp decline in sentiment this month all the more telling.

“The stark rise in Employers' National Insurance next year will hit retailers hard. And the planned increase in business rates for higher-value properties will add significant operational costs for distribution centres.

“The government must urgently partner with businesses across the distribution sector to ease the cumulative cost burden, which threatens to weaken investment and hiring in the year ahead, as well as resulting in higher prices for consumers”.