Omicron arrival devastates CBI's UK retail sales outlook
It’s been a disappointing end to the retail year as Omicron devastated any hopes that November’s positive expectations would accelerate further.
That’s the unsurprisingly bleak reading from the latest CBI monthly Distributive Trades Survey, which showed retail sales growth slowed in the year to December (a balance of +8% from +39% last month).
And businesses expect grow at a “similarly lacklustre pace in the year to January” with sales expected to grow 5%.
The survey of 109 companies, including 41 retailers, saw a general deterioration in reported and expected sales growth across the distribution sector following the announcement of Plan B Covid measures on 8 December.
Sales were seen as almost average for the time of year (-2% from +35% last month) and are expected to be poor for the time of year next month (-11%).
Internet sales were also broadly flat in the year to December (+3% from -14% last month. They were expected to decline 23% January, but that was before the threat of Omicron had really surfaced.
Over half of firms that responded before the announcement reported that sales were ‘up on last year. But this figure fell to one third for those that responded on or after 8 December.
Orders placed with suppliers grew at a faster pace in the year to December than in November, with a slower rate of growth expected next month.
Stock levels in relation to expected sales were reported as “more than adequate” for the first time since February this year and they’re expected to be broadly adequate in January 2022. Stock levels in relation to expected sales saw a positive balance (+22% from -2% last month).
Anecdotal evidence from respondents indicated that retailers are building inventories to mitigate ongoing pressures, although some continue to struggle to do so, the survey said.
CBI Lead Economist Ben Jones said: “Our December survey confirms what we’ve been hearing anecdotally about Omicron’s chilling impact on activity on the High Street, with retail sales growth slowing and expectations for the coming month sharply downgraded.
“On the supply side, retailers have been making progress in building up stocks, which were seen as more than adequate to deal with expected demand over Christmas. The concern now is the potential for rapidly rising sickness and staff absences to cause renewed disruption to supply chains in the New Year.”
Jones added: “It’s crucial that the Government takes steps to help society live confidently with the virus, including meaningful dialogue between business, government and unions to assess the impact of restrictions and the need for future support.”
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