Retail sales volumes experienced a significant decline in the year leading up to March, marking the fastest drop since April 2020, according to the latest CBI Distributive Trades Survey.
Retailers expect this decline to persist at a similar sharp rate in April.
In March, retail sales volumes fell at the steepest pace since April 2020, with a weighted balance of -52%, down from -43% in February. For April, sales are anticipated to decline at a comparable rate of -49%.
Retailers considered sales for this time of year “poor” in March, a decline from the previous month (-23% in March versus -16% in February). In April, sales are expected to fall short of seasonal norms, though by a slightly smaller margin of -19%.
Online retail sales volumes decreased in the year to March, following a period of strong growth last month, dropping to -11% from +43% in February. Retailers project a modest contraction in internet sales for April, estimating a decline of -5%.
Wholesale sales volumes also fell in March, but at a slightly slower pace than the previous month, with results showing -31% compared to -36% in February. Wholesalers expect the rate of decline to lessen further in April to -27%.
Overall, total distribution sales volumes continued to decrease in the year to March at a rapid rate of -38%, down from -40% in February. A similar rate of contraction is expected in April at -36%.
Martin Sartorius, Lead Economist, CBI, said: “Momentum in the retail sector remained poor in March, with annual sales volumes falling sharply and no signs of an imminent recovery.
“Retailers report that weak economic conditions continue to weigh on household spending, with subdued activity also evident across the broader distribution sector.
“Steps taken by the government last week to address youth unemployment challenges – including launching foundation apprenticeships in hospitality and retail – are welcome moves to mitigate rising employment costs.
“However, more must be done to lower the cost of doing business, including securing workable outcomes on the Employment Rights Act and delivering a simpler, more competitive tax system.
“The conflict in the Middle East – which risk fuelling price pressures and squeezing household budgets – underscores the need for the government to take further action to lower the cost of doing business for distribution firms.”
In the year leading up to March, retail orders placed with suppliers declined, but at a slower rate compared to February. Specifically, the decline was 26% in March, an improvement over February’s steep drop of 47%. Retailers anticipate reducing their order volumes at a slightly faster rate next month, with a decline of -30%.
In March, retail stock volumes relative to expected sales were moderately elevated, though still below the long-term average. Stock levels were +9%, down from +11% in February, while the long-term average stands at +17%. Retailers expect stock positions to remain broadly unchanged next month, with a +10% projection.
Motor trade sales volumes also contracted, but at a slower rate in the year leading up to March, with a decline of 29% compared to 47% in February. Motor traders expect sales to decrease at a faster pace next month, forecasting a 41% drop.
