Dec 22, 2020
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January retail looks “bleak” admits CBI after December gains delivered false hope

Dec 22, 2020

As if confirmation were needed, retail sales in January are expected to be “bleak”. Even though sales volumes bounced back strongly from November’s lockdown, analysts were already predicting a crash in January before the latest deeply damaging restrictions were announced, the Confederation of British Industry (CBI) said Tuesday.

December sales numbers improved pre-Tier 4 - Photo: Nigel Taylor

“The New Year looks set for an unpromising start, with retailers anticipating a sharp fall in sales in January”, Ben Jones, principal Economist at the CBI, said.

He also warned: “An expected deterioration in the labour market will likely weigh on household spending, even assuming the rollout of Covid-19 vaccines paves the way for a gradual lifting of restrictions as the year progresses”.

But it had looked so much brighter at the beginning of December with stores more optimistic than they had been since March 2019, describing sales as “good”. But that was mainly biased towards grocers, furniture retailers and ‘other normal goods’ vendors, such as cards, flowers and jewellery.

Nonetheless, clothing, footwear and department stores all continued to report volumes were lower than a year earlier, the CBI said.

Total sales volumes had recovered from two months of sharp declines, albeit underpinned by another month of rapidly expanding online sales, the CBI’s 23 November-14 December survey revealed.

Indeed, online sales remained strong in the year to December (balance of +51%, from +55% compared with the long-run average of +46%) and are expected to remain so next month (+56%).

Overall sales volumes “stabilised” in the reported period, with a balance of only 3% of the 143 businesses surveyed, including 81 retailers, reporting a decline in sales compared with last year. That was a huge improvement from a 25% decline in November.

Orders were broadly flat, with a balance of only 4% reporting a decline, the best result in 14 months.

“It says something about the challenges the retail sector has faced during 2020 that stable sales volumes in the run-up to Christmas were seen as a good result for the time of year”, Jones noted.

And then the outlook mood changed sharply, even before Tier 4 was announced. January is expected to be "bleak" at best, with a reading of -33% indicating an expected sharp fall in sales.

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