UK Retail Faces Deepening Sales Slump, New Data Shows
Recent reports paint a concerning picture of the UK retail sector, indicating a significant slowdown in sales both during the crucial holiday period and heading into the New Year. While the Office for National Statistics released its November sales report recently, the Confederation of British Industry’s (CBI) holiday trading retail report offers a more current and arguably more insightful view of the challenges retailers are currently facing.
The CBI’s distributive trades survey reveals a “bleak” outlook for holiday trading, with sales volumes declining at an accelerating rate in December. This downturn extends a period of weakness that began in mid-2023, suggesting the issues are not simply a seasonal blip. The survey’s methodology focuses on the balance of retailers reporting sales increases versus decreases, regardless of magnitude, providing a broad overview of sector performance.
Specifically, a balance of 44% of retailers reported a fall in sales, a worsening situation compared to the 32% recorded in November. Worryingly, expectations for January are even more pessimistic, with 57% anticipating a further deepening of the downturn – a sentiment not seen since March 2021. December sales were already considered “poor” relative to seasonal norms, with a balance of -31% (compared to -20% in November), and January is projected to be similarly disappointing at -34%.
The struggles aren’t limited to brick-and-mortar stores. Online retail sales also experienced a decline in December, falling at a moderate rate after two months of consecutive growth (-12% compared to +13% in November). The outlook for online sales is particularly grim, with expectations of a steep contraction next month (-42%).
Martin Sartorius, Principal Economist at the CBI, summarized the situation, stating that retailers reported a rapid fall in annual sales volumes in December, attributing this to weak consumer confidence and softer trading conditions leading up to Christmas. He emphasized that firms are not anticipating any improvement in the New Year, with sales expectations deteriorating to their lowest level in over four years.
