Warm weather boosts above average seasonal sales for retailers - CBI

While a heat wave is taking hold of the UK, the higher-than-average temperatures seem to have had a positive impact on shoppers, according to the Confederation of British Industry (CBI) with retailers benefitting from above-average seasonal sales and improved order volumes growth.

In the year to June since September 2017, the UK’s retail sales demonstrated growth at the fastest pace, based on the CBI’s latest monthly Distributive Trades Survey (DTS).  

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In particular, internet sales grew at a faster rate than the long-run average for the first time since January 2018 (although retailers expect growth to ease slightly in the year to July).

The survey conducted between 29 May and 13 June 2018, consisting of 106 firms (of which 45 retailers), also revealed that sales volumes were well above average for the time of year, following three months when they were below seasonal averages.   Additionally, the survey reported a jump in growth in the volume of orders placed on suppliers.

Retail sales growth was fairly broad-based across retail sub-sectors, with the pick-up in June driven particularly by a rise in non-store sales, department stores, durable household goods, and “other” normal goods. Grocers and hardware & DIY stores also fared well, reporting robust sales. Meanwhile, carpet & furniture stores and clothing retailers saw a drop in sales volumes in the year to June.

Anna Leach, CBI Head of Economic Intelligence, said:“Higher-than-average temperatures seem to have had a positive impact on shoppers, with retailers benefitting from above-average seasonal sales and improved order volumes growth. While today’s findings will bring some summer cheer to retailers, underlying conditions for the sector remain challenging – household spending remains under pressure from the slow recovery in real wage growth and the sector is still grappling with key structural changes like digital transformation.”   

Looking ahead, retailers expect growth in sales volumes and orders placed on suppliers to ease in the year to July. 

Elsewhere in the distribution sector, wholesalers reported flat sales volumes in the year to June (breaking 22 months of uninterrupted growth) – although firms expect growth to pick-up again in July. Motor traders continued to report modest sales volume growth, and they expect growth to accelerate sharply in July.