Retail sales volumes remained deeply depressed in the year to May, according to the CBI’s latest monthly Distributive Trades Survey. The pace of decline slowed a little compared with April (when retailers reported the joint-fastest drop since the start of the survey in 1983). And volumes are expected to fall at a slightly slower – but still historically fast – pace next month.
The survey of 87 retailers also found that orders placed with suppliers fell at a near-record pace in May. Stock levels in relation to expected sales rose to their highest balance since October 2019, prior to the Brexit deadline that month.
The CBI’s special COVID-19 questions suggested that supply disruptions have worsened since April, with a greater share of retailers now reporting shortages of some goods (58%), increased cost pressures (64%), shipping delays (44%) and capacity constraints (60%).
Financial pressures also remain tight. Four-fifths (80%) of retailers reported cash-flow difficulties (though this was down from 96% in April).
Over half of retailers (53%) now report temporarily laying off staff, up from April, whilst the number reporting permanent layoffs was unchanged (8%).
Rain Newton-Smith, CBI Chief Economist, commented: “The retail sector is at the sharp end of a crisis, with many businesses up against it. The government’s support packages are making a real difference, with more shops reporting that jobs have been furloughed, rather than lost. The furlough system will need to adapt as more businesses open their doors in the months ahead.
“As we gradually reopen the economy, retailers may yet need more support from the government if demand falters. Ensuring safety in the workplace remains the top priority, as more firms look to bring staff back to work. Many challenges remain in managing supply chains and costs in a tough environment.”
