Retail sales fell at the fastest pace since January 2012 over the year to April 2016, disappointing expectations for a pick-up in growth, according to the CBI’s latest monthly Distributive Trends Survey.
The survey of 117 firms showed that orders placed on suppliers also fell over the year, while sales for the time of year were considered to be average. Sales are expected to rebound next month, while orders are set to fall at a broadly similar pace.
22% of retailers surveyed said that sales volumes were up in April on a year ago, whilst 36% said they were down, giving a rounded balance of -13%. This indicated a fall in sales from the previous month (+7%). However, sales growth is set to rebound in the year to May (+9%), although it remains below the long-run average of +24%.
Within retail, department stores and the clothing sector were the main drivers behind the fall in sales. Performance also deteriorated in the durable household goods sector and in footwear and leather goods.
Meanwhile, growth in the volume of internet sales slowed in the year to April, with the survey balance falling further below the long run average. Internet sales growth is set to pick up slightly in May.
In contrast to a weaker retail sector, wholesaling reported faster sales volumes growth in the year to April, while motor trades saw sales volumes rising at a slower pace over the year, although beating expectations of a more pronounced slowdown.
CBI Director of Economics, Rain Newton-Smith, said: “Cold weather put a chill in sales of spring and summer ranges with a reported dip in retail sales in the year to April, but with the near-term outlook for household spending holding up the sector expects a modest rise in sales next month.
“However with margins remaining tight within the sector, retailers will continue to operate in a fiercely competitive environment for some time.”