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RETAIL ENVIRONMENT

Retail woes with worrying fall in sales

UK retail sales volumes fell at their fastest pace since the financial crisis in the year to June, according to the latest figures from the Confederation of British Industry (CBI).

A survey of 88 firms, including 45 retailers, conducted by the industry body, found that the slowdown - the fastest drop in sales recorded since March 2009 - was likely driven by the relatively cooler weather compared with last year.

Sales for this time of year have been below average, but to a lesser degree than in May. A total of 16 per cent of retailers said that sales volumes were up in June on a year ago, whilst 58 per cent said they were down.

Within the retail sector, grocery firms were the largest contributors to the fall in sales volumes, with the hardware and DIY, and footwear and leather sub-sectors also reporting declines.

Non-store sales such as online orders and mail order were the only retail sectors to see a rise in sales during June.

Internet sales were broadly flat on a year ago (up three per cent), following strong growth in the previous month (up 38 per cent).

Despite this, on a year-on-year-basis, e-commerce was facing similar challenges to the sector as a whole, with internet sales stalling in the year to June, marking the weakest growth since the question was first introduced to the survey in 2009.

The CBI cited recent data suggesting that UK economic growth has slowed noticeably in the second quarter of 2019, as the boost from stockpiling activities in the first quarter fades.

The trade body added that it expected the UK to return to a subdued growth path further ahead, although risks from Brexit uncertainty and global trade tensions remain heightened.

Alpesh Paleja, principal economist at the CBI, said: “This month’s drop in sales should be taken with a pinch of salt, given the backdrop of last June’s heatwave and the start of the World Cup.

“But even accounting for both factors, underlying conditions on the High Street remain challenging – retailers are having to continually compete for the attention of value-conscious shoppers, in the age of digital disruption.”

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