Retail Sector Struggles Continue as Sales Decline for Fifth Consecutive Month, CBI Survey Shows

Retail Sector Struggles Continue as Sales Decline for Fifth Consecutive Month, CBI Survey Shows

(IN BRIEF) The latest quarterly Distributive Trades Survey from the CBI shows that retail sales in February continued to decline for the fifth consecutive month, with retailers expecting a more significant downturn in March. Retailers remain pessimistic about the future, with a sharp decline in investment intentions and plans to reduce headcount. The survey highlights a continued drop in distribution sales across retail, wholesale, and motor trades. Retailers are also adjusting their expectations for future sales, with online retail sales and orders placed with suppliers also showing declines. The overall sentiment points to ongoing challenges for the sector, with government support, such as reforming business rates and the Apprenticeship Levy, seen as critical to reviving business confidence and spurring growth.

(PRESS RELEASE) LONDON, 25-Feb-2025 — /EuropaWire/ — Retail sales volumes continued to decline in February for the fifth consecutive month, according to the latest quarterly Distributive Trades Survey from the Confederation of British Industry (CBI). Retailers forecast that sales will fall at an even faster rate in March, reflecting a prolonged period of challenging trading conditions.

Retailers’ outlook for the future remains bleak, with expectations of reduced headcount and lower capital expenditure over the coming months. Investment intentions worsened sharply, showing the largest decline since May 2019, signaling mounting concerns about the sustainability of business growth.

Key highlights from the survey include:

• Year-on-year retail sales volumes dropped at a similar pace to January, with a weighted balance of -23% in February, down slightly from -24% in January. Retailers anticipate a more significant sales decline in March, projecting a balance of -30%.
• Sales for the season were regarded as “poor” by a larger proportion of retailers (-34% in February compared to -24% in January), with expectations for March sales also falling below seasonal norms, albeit to a lesser degree (-27%).
• Retailers remain pessimistic about their business prospects, with a sentiment indicator of -19% in February, slightly improving from -21% in November, but still reflecting an overall negative outlook.
• Investment intentions for the next 12 months have plummeted to their lowest point since May 2019, with a -56% balance, compared to -27% in November.
• Headcount in retail declined at a moderate pace over the year to February (-13%, up from -18% in November), with further job losses expected in March at a similar rate (-15%).
• Distribution sales volumes across all sectors (retail, wholesale, and motor trades) fell by -26% in the year to February, a slight improvement from the -32% decline in January. Sales are expected to continue their decline in March, although at a slower pace (-22%).

Commenting on the data, Martin Sartorius, Principal Economist at CBI, said: “February marked another challenging month for the retail sector, with weak demand continuing to dampen performance across the distribution industry. Retailers are forecasting a sharper sales downturn in March, partly due to the later timing of Easter this year. The significant decline in investment intentions is a stark reminder of the need for stronger government action to boost business confidence and stimulate growth.”

Sartorius further noted that businesses, having faced rising overheads and squeezed budgets, are in need of renewed support to drive growth. He emphasized the importance of reforming business rates and the Apprenticeship Levy as potential ways to alleviate some of the financial pressure on businesses, enabling them to invest in the jobs and growth that are necessary for recovery.

Additionally, the survey revealed:

• Retail price inflation remains below the long-term average for the fourth consecutive quarter (+25%, up slightly from +24% in November, compared to a long-run average of +41%). Retailers expect selling prices to increase at a similar rate in March (+25%).
• Orders placed with suppliers by retailers fell significantly (-38% in the year to February, compared to -43% in January), and expectations for order cuts are even more pronounced for March (-47%), marking the weakest outlook since March 2021.
• Stock volumes relative to expected demand softened in February (+16%, compared to +26% in January), broadly in line with the long-term average (+17%). Stock levels are expected to remain relatively unchanged in March (+13%).
• Online retail sales volumes declined at a faster pace in February (-28%, compared to -22% in January), with similar declines forecast for March (-29%).
• Wholesale sales volumes declined at a slower pace in February (-19%, compared to -30% in January), with wholesalers anticipating a further easing of the downturn in March (-14%).
• Motor trade sales volumes continued their steep decline in February (-58%, similar to the -59% drop in January), although motor traders expect the pace of decline to slow considerably in March (-30%).

CBI Press Office is available (including out of hours) by telephone 0207 395 8239 and email press.office@cbi.org.uk.

SOURCE: The CBI