Retail stocks at all-time low

While retail sales were broadly average for October, stock adequacy reached a record low, according to the latest distributive trades survey from the Confederation of British Industry (CBI.)

The not-for-profit membership organisation, which represents over 190,000 businesses, surveyed 123 companies, including 51 retailers.

Stock levels in relation to expected demand were at an all-time low for the seventh consecutive month in October across the distribution sector as a whole, with e-commerce, wholesale, and motor traders all seeing survey record lows.

The organisation expects stock levels to improve only slightly in the year to November.

The survey also found that growth in retail sales and orders accelerated in the year to October, compared with the year to September. However, CBI said that the 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.

According to the report, 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 online 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.

The CBI said that it expects next month’s sales to be above seasonal norms.

“The UK’s economic recovery has been pretty bumpy lately and the same seems true of the retail sector,” said Ben Jones, CBI principal economist. “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.”

“It’s therefore crucial the Government remains agile to support the sector. The Chancellor has the opportunity at his upcoming budget to signal the government’s intent to reform the outdated business rates system, starting with more frequent revaluations and removing any disincentives for investment in energy efficiency and decarbonisation.”

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