April saw a significant drop in retail sales compared to the previous year, as reported by the latest CBI Distributive Trades Survey.
The sales volumes decreased to a weighted balance of -44% in April, following a stable performance in March (+2%). This decline was unexpected and suggests that factors other than seasonal variations are impacting sales.
Seasonal Timing and Its Effects
Although the early occurrence of Easter this year was thought to impact April’s sales, the actual decline indicates that other economic or market factors may be contributing. Retailers predict that sales will continue to fall next month, though at a lesser rate of -19%.
Orders and Stock Levels Analysis
Orders to suppliers also declined significantly in April by 49%, continuing a year-long trend. Expectations for the coming month suggest a smaller decrease in orders, projected at -30%. In terms of stock, levels were reported to be slightly higher than necessary at a balance of +8%, which is still below the long-term average of +17%. Retailers expect this figure to decrease to +4% in the following month.
Alpesh Paleja, a CBI Lead Economist, stated:
“April’s sharp fall in retail sales was likely related to the earlier timing of Easter this year, so we should take it with a pinch of salt. Indeed, the sector is likely to benefit from some favourable tailwinds this year, as falling inflation continues to drive growth in households’ real earnings.
“That being said, conditions do remain challenging on the ground. April’s fall in sales was faster than expected and retailers aren’t overly hopeful about the month ahead.
“Despite inflation headwinds easing, the legacy of high costs remains with us. With business rates set to ramp-up for larger businesses just as rises to the national living wage take effect, retailers are looking for additional support to provide some short-term relief.”
