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UK retail sales struggle with sluggish growth

·2-min read
Demand cooled for retailers in the year to September after running red hot over the summer. Photo: Reuters
Demand cooled for retailers in the year to September after running red hot over the summer. (Reuters)

UK’s retail sales grew at the weakest pace since March 2021 in the year to September, while growth in orders placed with suppliers also slowed, new data revealed.

In a survey of 126 companies, including 45 retailers, conducted by the Confederation of British Industry (CBI), respondents viewed sales as poor for the time of year for the first time since March 2021.

Low stock adequacy remained a concern across the distribution sector.

Respondents said they do not expect the transport and production issues that are causing shortages to ease significantly until at least next year and, in some cases, beyond.

This comes as the Office for National Statistics said retail sales volumes were down by 0.9% in August, following a 2.8% fall in July.

At the time, Lynda Petherick, head of retail at Accenture UKI, had said that the continued impact of labour shortages and supply chain disruption "weighed heavy on the sector, in a month that was characterised by images of bare shop shelves and delayed deliveries".

The CBI is now saying stock levels relative to expected sales across the distribution sector hit a survey record low for the sixth consecutive month.

Read more: Why is the UK facing a HGV driver shortage?

“Demand cooled for retailers in the year to September after running red hot over the summer, pushing sales below seasonal norms for the first time since March,” said Ben Jones, CBI principal economist. 

However, he said volumes are expected to return to more typical levels for the time of year by October.

Jones also urged the government to take steps to relieve some of the pressure on the distribution sector so that the country does not face shortages of key goods in the coming months, starting with adding lorry driver to its Shortage Occupation List.

The UK is facing a lorry driver shortage due to Brexit and the COVID-19 pandemic, which is impacting several industries and could lead to major supply issues.

Elsewhere, the report said internet sales growth slowed in the year to September and has now been below the long-run average for five consecutive months, with a similar pace of growth expected in the year to October.

Wholesalers experienced an uptick in growth in the year to September and expected a similar rate next month. Motor traders saw growth in sales volumes ease, but expected it to pick up next month.

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