Retailers see 3rd month of growth

Retailers enjoyed a third consecutive month of sales growth in the early build up to Christmas, but are predicting flat sales in the New Year, according to the CBI. The business group’s latest Distributive Trades Survey shows that in the year to December 9, retailers maintained year-on-year sales growth at November’s levels, led by a strong performance from grocers and durable household goods. Meanwhile, motor traders reported their fastest sales growth since April 2002.

Asked about sales over the last year, 45 per cent of respondents said they had risen, while 32 per cent reported a fall. The resulting balance of +13 per cent is slightly lower than had been expected (+19 per cent), but matched November’s figure. Because the survey closed on December 9 retailers could still see a further sales boost for the month as a whole.Sales for the time of year were reported to be poor by a balance of 16 per cent of retailers, and a net 13 per cent expect sales to remain below seasonal norms in January.

Andy Clarke, Chairman of the CBI Distributive Trades Panel, and Chief Operating Officer of Asda, said: “With a week left to go until Christmas, retailers may yet benefit from a flurry of last-minute sales and from shoppers bringing forward spending to beat the VAT rise.“

“Although individual retailers may post healthy-looking Christmas numbers compared to the same time last year when we were in the grip of the recession, conditions across the whole of the sector are likely to remain challenging in 2010. The recent growth in retail sector sales is expected to fizzle out in the New Year."

“Meanwhile, retailers also face the additional challenge of having to change the prices of everything on the shelves to comply with the VAT rise during their busiest trading period.” Stock levels remain almost unchanged from November with a balance of +7 percent reporting them adequate to meet demand.The volume of orders placed upon suppliers rose again this month (+7 per cent), at a slightly slower rate than expected (+13 per cent). Mirroring the movement in sales volumes, orders are also expected to be flat in the New Year.

Looking at individual retail sectors, footwear & leather posted solid growth. In the wholesale sector, sales volumes were flat (+1 percent), beating expectations of a fall (-31 per cent). Very modest sales growth is anticipated in January (+4 per cent). Clothing, textiles and footwear wholesalers saw the strongest sales growth since March 2004 (+43 per cent).

Image: Christmas sales