Stability set to return to high street

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Retailers believe stability is returning to the market despite high street sales falling for a fourth consecutive month in August, according to the latest survey by CBI.

The CBI Distributive Trades Survey revealed 34 per cent of retailers said their volume of sales in the year to August had risen, while 51 per cent said they fell.

This created a rounded balance of -16 per cent which was similar to sales declines in the previous three months, but was better than the expected -23 per cent. A similar fall of -14 per cent is predicted for September.

A quarter of retailers reported sales to be poor, while the three-month moving average of sales volumes, which smoothes out monthly peaks and troughs, remained as weak in July as -16 per cent.

However, retailers cut their orders placed with suppliers at a faster rate in the last two months (a balance of -22 per cent), with a similar decline of -24 per cent expected in September.

The survey also revealed that a balance of -41 per cent of companies had to reduce their headcount during the period, which is more negative than in May when the figure was -29 per cent.

A further decline of -36 per cent is predicted in September.

Retailers are no longer feeling so pessimistic about the outlook for their general business situation though. Only -2 per cent of firms are expecting a deterioration over the next three months, on balance.

Andy Clarke, chairman of the CBI Distributive Trades Panel and chief operating officer of Asda, said: “These results round off a slow and disappointing summer for many in the high street, and the picture is not set to improve in September.

“Stock levels have been pared right back as retailer have adapted to weaker consumer demand. However, throughout the year retailers have become less and less negative about the business outlook, and that reflect increasing signs of stability in the wider economy.”

A balance of 48 per cent reported a fall in sales volumes in the wholesale sector over the year to August, which was much sharper than in July (-19 per cent), and an even steeper decline is expected in September (-55 per cent).

The volume of orders placed upon suppliers has fallen heavily but wholesalers expect the business situation to improve over the coming three months, and investment intentions are not as weak as they have been over the past year.

Motor traders’ sales fell moderately in the year to August (a balance of -11 per cent) and by less than expected (-50 per cent). The sector expects sales volumes to grow tentatively in September (6 per cent) for the first time since May 2008 (9 per cent), while expectations about the business situation are positive (6 per cent) for the first time since February 2008.

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