No Olympic boost for UK retailers

27 August 2012

LONDON: Retail sales fell to their lowest level in four months in the UK during August, despite hopes that the Olympic Games would boost the sector, the Confederation of British Industry has revealed.

The trade body's Distributive Trades Survey, carried out over the first two weeks of August and thus coinciding with the Games, found 31% of retailers had seen a fall in sales volumes year on year.

By contrast, 27% of chains posted an uptick on this metric. The rounded balance of -3 between these totals constituted the worst returns since April 2012, and compared with a total of +11 in July.

"Although this summer's events created a mood of celebration across the nation, these figures would suggest this positivity did not extend to the high street," said Judith McKenna, chair of the CBI distributive trades panel.

More specifically, 12 of the 13 retailing sub-sectors saw a slowdown in sales in August, with recreational goods and department stores reporting the sharpest annual declines.

Only the footwear and leather goods sector bucked the trend, reporting a net balance of +58 in August, up from +42 in July.

In sum, however, the CBI's forward-looking index covering trading conditions over the next three months, stood at -17, weaker than at any time since February 2009, when it reached -26.

More positively, conditions may improve in September, with sales expected to rise slightly, shown by a +6 balance between the retailers anticipating an increase in demand and those expecting a contraction.

In line with the overall weakening in sales in August, the orders placed by retailers with suppliers were also down. The gap of -11 was the largest on record since January 2012.

Similarly, investment intentions for the year ahead remained highly negative, on -13, compared to the long-term average of zero.

Elsewhere, year-on-year shop price inflation, at +31, is now at its most modest rate since November 2009. Retailers expect these costs to moderate further in September.

Data sources from CBI; additional material by Warc staff