According to the CBI’s latest quarterly Distributive Trades Survey,retail sales are in slow growth,but orders remained above expectations.

The survey of 124 firms consisting of 68 retailers showed that retail sales growth slowed slightly in the year to February, in line with expectations and was a little below average for the time of year. Meanwhile, orders placed on suppliers were unchanged, better than expectations. However, expectations for March are the weakest since 2013, with sales expected to be flat on the year.

Respondents expect a decent improvement in business conditions (which considers recent trends in sales, orders and profitability) over the next three months. Average selling prices crept up for the first time in three quarters, easing pressure on retailing margins. And although recruitment growth slowed, it remained well above average rates with a similar rise expected next month.

But retailers now plan to slightly scale back investment spending in the year ahead, following two quarters when firms expected to raise capital spending.

Rain Newton-Smith, CBI director of economics, says: “Overall, conditions remain challenging for retailers. Although sales have continued to grow and optimism has risen, expectations for sales growth are lacklustre and retailers are still wary of investing. And unreformed business rates are making it tougher for retailers to open up new shops on the high street. But retailers still stand to benefit from the low level of inflation and strong job creation across the economy, which should continue to support household spending.”

Key findings:

- The volume of internet sales (+29%) remained far below its long-run average (+50% - since August 2009)
- 38% of respondents reported that sales volumes were up on a year ago, while 28% said they were down, giving a balance of +10%, matching expectations (+10%)
- Retailers expect sales volumes growth to dip next month (+2%), the lowest for almost three years (-6% in May 2013), with 25% expecting them to rise and 23% to fall
- Volumes of sales for the time of year in November were marginally below seasonal norms (-4%)
- Some sub-sectors recorded sales volumes falling over the year to February, such as furniture and carpets (-20%)
- The volume of orders placed upon suppliers was broadly flat (-2%), with 26% of survey respondents reporting a rise and 28% reporting a fall. Firms anticipate a fall next month (-12%), with 18% expecting an increase and 30% a decrease
- Stocks relative to expected demand ticked higher (+15%), returning towards its long run average (+17%)
- Retailers expect their overall business situation to continue to improve over the next three months (+12%), at roughly the same pace as the previous quarter (+11%)
- Investment intentions for the next year compared to the previous twelve months were negative (-4%), following two consecutive quarters of positive growth (+5% in the three months to November, +17% in the three months to August)
- Average selling prices rose in the year to February (+10% from -7% in the year to November)

- 42% of wholesalers reported sales volumes to be up on last year and 26% said they were down, giving a balance of +16% - an improvement on the previous month (+8%)

 *This article was published on furniturenews.net.