Oct 28, 2020
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Covid return hits October retail​ hard, worse expected for November - CBI

Oct 28, 2020

Increased local lockdowns and the resurgence of Covid infections spelt more bad news for UK retail on Wednesday as any hint of a recovery was stopped in its tracks this month.

Photo: Sandra Halliday

Retail sales fell in the year to October, pointing to loss of momentum from September, when sales rose at the fastest pace for 18 months, according to the CBI’s latest monthly Distributive Trades Survey (CBI). Expect more dreary news in November, it warned.

With footfall still down by a third, many retailers face a difficult run-up to the all-important Christmas period, the body noted. However, online demand was the one truly bright spot with strong growth this month expected to carry on through November and beyond.

The survey of 116 firms, of which 54 were retailers, showed its monthly retail sales index fell to -23 in October, its lowest level since June, after hitting an 18-month high of +11 in September. Sales are expected to fall at a slightly worse pace next month (-26%). 

The survey found tough conditions across non-food retail categories, and department stores, clothing and ‘other normal goods’ were among those reporting falling sales. Furniture, DIY and recreational goods retailers, however, reported strong growth. 

With sales volumes expected to decline again in the year to November, and stock levels deemed broadly adequate, orders placed with suppliers fell for the 18th consecutive month -- and at the fastest pace since June. Orders are expected to fall at even faster pace next month.

Retail sales volumes were down by 22% relative to ‘normal conditions’, compared to a shortfall of 14% in September. Sales were seen as poor for the time of year (balance of -5%, from +4%) and are expected to be broadly average in November (-1%).

Stock levels in relation to expected sales were seen as broadly adequate, after easing to their lowest level since March (+6%, from +11%). Stock levels are expected to remain similar next month (+8%).

Ben Jones, CBI Principal Economist said: “The fall in retail sales in October is a warning sign of a further loss of momentum in the economy as coronavirus cases pick up and restrictions are tightened across many parts of the country.

“It’s no surprise that sales have dipped despite no new direct restrictions on retail in England, as the evidence from earlier in the year suggests consumers become more cautious as case numbers rise. He added: “It is vital that local authorities use their discretion over the new Tier 2 grant funding to target support in a way that helps keep town and city centres open for business.”

The CBI report follows other surveys last week that showed consumer confidence declined sharply this month amid a second wave of Covid-19. Latest data from Springboard showed shopper footfall in high streets and shopping centres fell for the fourth month running, down 3.1% in the week to 17 October.

Fashion sales in stores are among the hardest hit and are likely to remain so until restrictions end. Supermarkets in Wales banning sales of clothing during its 17-day total lockdown only add to the already depressed market.

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