Retail sales pick up but stock levels hit record low

Retailers reported a stronger-than-expected sales rise in October but global supply chain problems reduced their stocks to the lowest level since records began in 1985.

According to the latest monthly CBI Distributive Trades Survey, sales are expected to be above seasonal norms in November.

The survey of 123 companies, including 51 retailers, found that growth in retail sales and orders accelerated in the year to October, compared with the year to September.

However, this pick-up may partly reflect a comparison with October 2020, when sales and orders both declined amid rising Covid-19 cases and a tightening of social restrictions.

The pace of internet sales growth for the year to October slowed further below the long-run average rate.

This may also reflect base effects, as rising Covid-19 cases in October 2020 prompted consumers to shop on-line in greater numbers.

Meanwhile, wholesalers reported sales as above seasonal norms in October, and to broadly the same extent as last month. Wholesalers expect sales to remain good for the time of year next month, albeit to a lesser extent.

Motor traders also reported sales as good for the time of year, and more so than last month, with further improvement expected in November.

Stock levels in relation to expected demand reached a record low for the seventh consecutive month in October across the distribution sector as a whole, with all three sub-sectors also seeing survey record lows.

Stock adequacy is expected to improve only slightly in the year to November.

Ben Jones, CBI principal economist, said: “The UK’s economic recovery has been pretty bumpy lately and the same seems true of the retail sector. Sales performance has jumped around in recent months, while stock shortages continue to bite.

“Disruption to supply chains, combined with staff shortages and uncertain public health conditions mean retailers are finding it difficult to plan for the winter ahead.”