Consumers splashing out on new clothes helped push up retail sales in the year to July, but the pace of growth is expected to slow next month, according to the CBI’s Distributive Trades Survey.
The survey of 117 firms showed that year-on-year growth in the volume of retail sales fell back slightly from June, after May’s strong rally. Growth is expected to slow further next month, but sales volumes are broadly average for the time of year and are expected to remain so in August.
Orders placed on suppliers grew at a slightly quicker pace than in the previous month, but are expected to slow significantly in August.
Among the retail sub-sectors, grocers and department stores saw flat sales volumes, and footwear and leather goods sales volumes fell. Clothing sales volumes rose strongly, at their fastest rate since January.
Sales volumes in the wholesaling sector rose strongly in the year to July, exceeding expectations and with further strong growth expected next month. Motor trades sales volumes continued to grow, albeit at a slower pace than in June.
Barry Williams, CBI Distributive Trades Chairman and Asda’s Chief Customer Officer, said:
“Summer trading is traditionally slower across the retail sector but warm weather can often provide a welcome boost, as we saw towards the end of June and the beginning of this month.
“Despite the upbeat outlook for the UK economy, retailers are still finding conditions challenging and it’s certainly something every shopkeeper will need to keep an eye on.
“Meanwhile, the recovery in wage growth should help support growth further down the line.”
• 36% of retailers said that sales volumes were up in July compared with the previous year, whilst 15% said they were down, giving a balance of +21%, below expectations (+33%)
• 30% of firms expect sales volumes to increase in the year to August, albeit at a slower pace, with 17% expecting a decrease, giving a balance of +13%
• 29% of retailers placed more orders on suppliers than they did a year ago, and 11% placed fewer, giving a balance of +18%. This is expected to fall back next month (-10%)
• 22% of firms said that their total retail sales volumes of sales were above average for the time of year, whilst 24% said they were below average, giving a rounded balance of -1%
• Clothing sales volumes grew strongly (+78%). Sales volumes also grew in other normal goods (+42%) – which includes flowers, watches and jewellery, chemists (+39%) and hardware & DIY (+11%).
• Sales volumes were flat for grocers (0%) for the second consecutive month, and decreased for non-store (-12%) and footwear & leather (-29%)
• Volumes of internet sales in the retail sector grew at a similar pace as in June (+32%), and are expected to rise at a faster pace next month (+44%). However, this will be the lowest expected pace of growth since July 2014.
• 62% of wholesalers reported sales volumes to be up on last year, and 11% said they were down, giving a balance of +51% and exceeding expectations (+41%)
• Industrial materials (+67%) had a strong showing.
• 18% of motor traders reported that sales volumes were up on a year ago, while none said they were down, giving a balance of +18%
• Orders placed on suppliers (+35%) exceeded expectations (+19%).