Retail sales stabilise but merchants still struggle

Published:  30 September, 2009

LONDON: The CBI's monthly Distributive Trades Survey shows builders' merchants hardest hit in sales terms.

Industrial materials, builders' merchants and electrical installation materials suffered the largest sales falls in the wholesale sector. And sales are expected to fall again next month, the survey said.

Overall, the report notes that conditions in the retail sector are "beginning to stabilise, with sales broadly flat in the year to September, and expected to remain unchanged in October".

Andy Clarke, chairman of the CBI Distributive Trades Panel, and chief operating officer of Asda, said: "After such a difficult summer, it is encouraging to see signs that conditions in the retail sector are stabilising. However, with unemployment rising, wage growth low, and consumers building up their savings, spending is likely to remain subdued for some time.

"After months of heavy de-stocking, retailers may now be starting to think about getting new products on the shelves," he said.

Inventory levels remain low, with a net 3% of retailers reporting volumes of stocks to be slightly more than adequate to meet expected demand, compared with a zero balance in August, the survey said.

Volumes of orders placed with suppliers fell modestly, the slowest rate recorded since February, and are expected to stabilise next month.

The three-month moving average of sales volumes, which smoothes out monthly peaks and troughs, improved on the previous month, a balance of -9%, compared with -16% in August. However, despite sales volumes stabilising, a net 22% of firms described them as below average for the time of year.

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