Christmas comes early for high street retailers amid fears of stock shortages
Fears of gift shortages over Christmas sparked the strongest monthly rise in retail sales in November since May 1990, according to the CBI.
Retailers reported the strongest sales for the time of year since September 2015 and said they expected the level to remain above seasonal norms to a similar extent next month.
The CBI’s distributive trades survey, which questioned 125 companies including 51 retailers, found that year-on-year retail sales growth accelerated this month, while internet sales fell for the first time since the survey asked that question in 2001.
The results reflected the tightening of Covid-19 restrictions in November 2020, which weighed on overall volumes but pushed up internet sales growth as consumers who were stuck at home went on a digital shopping spree.
The CBI, which claims to speak on behalf of 190,000 businesses, said the monthly balance of retail sales, which looks at whether sales are higher, lower or the same as last year, rose to their highest level since September 2015, at a balance of +35 per cent, above the consensus of +33 per cent.
Ben Jones, the CBI’s lead economist, said: “Christmas seems to have come early for retailers, with clothing and department stores in particular seeing a big upward swing in November.”
He said that reports of supply chain disruptions appeared to have prompted consumers to start their Christmas shopping early, while efforts by retailers to keep their shelves full seemed to be paying off, with stock levels regarded as adequate for the first time in seven months.
“Overall, retailers are becoming more optimistic, with both employment growth and investment intentions picking up strongly. Cost pressures remain a very real concern, however, with selling prices growing at the fastest pace since 1990,” he added.
The balance of +35 per cent for retail sales this month compared to -1 per cent last month, while those surveyed said they expected demand next month to remain above seasonal norms by a broadly similar balance of +32 per cent.
However, Gabriella Dickens, an economist at Pantheon Macroeconomics, said: “The figures may not be as positive as they first appear. For starters, the rise in the headline balance is partly the result of base effects, as consumption dropped sharply last November following the reintroduction of Covid restrictions.”
The most recent official data from the ONS showed that retail sales rose in October for the first time since March and April, when the reopening of shops after a lockdown sparked a surge in sales followed by a steady fall as other businesses opened, presenting consumers with a greater choice of places in which to spend their money. The data also provided further evidence of significant price pressure in Britain, which economists are suggesting may push the Bank of England to raise rates next month for the first time since the start of the pandemic.
According to the CBI survey, retailers reported prices rising at their fastest pace since May 1990, and expected a similar rate of increase next month.
Employment in the sector, which has been under long-term pressure from online retail, also rose for the first time since November 2016. Retailers said they expected business conditions to improve over the next three years by a balance of +8 per cent, up from +6 per cent in the last quarter.
The survey was conducted between October 27 and November 16. The balance is the weighted difference between the percentage of retailers reporting an increase and those reporting a decrease.
While stock levels were said to be too low for the eighth month in a row, the balance of -18 per cent was an improvement on the previous balance of -31 per cent and was the lowest since May.