- The April CBI distributive trades survey showed retail sales collapsed in April.
- The sales balance fell to an equal record low of -55% in April from -3% in March (when the survey was completed before the lockdown was imposed).
- The CBI survey indicates that retail sales are likely to see a substantially larger fall in April than in March. ONS data shows that volumes declined a record 5.1% month-on-month and 5.8% year-on-year.
- The CBI reported that 67% of retailers reported a big hit to sales from coronavirus and 39% had closed completely.
- Apart from the food sector, the retail picture is gloomy and is likely to will remain so until lockdown restrictions start to ease.
- Meanwhile, the near-term fundamentals for consumer spending have clearly taken a substantial downturn as a result of coronavirus. Some people have already lost their jobs, despite the supportive Government measures, while others may be worried that they may still end up losing their job once the furlough scheme ends. Additionally, many incomes have been impacted.
- Furthermore, consumers are likely to adopt a much more cautious approach to discretionary purchases given the current economic environment.
- Online sales are coming increasingly to the fore, but they can only make up a limited amount of the lost business. Significantly, online sales as a share of total retail sales reached a record 22.3% in March.
- EY ITEM Club suspects that consumer spending will contract by close to 15% quarter-on-quarter in the second quarter, thereby being the major factor in expected GDP contraction of around 13% quarter-on-quarter.
Howard Archer, chief economic advisor to the EY ITEM Club, comments:
The April CBI distributive trades survey – carried out 27 March – 15 April – showed a record drop in retail activity as the lockdown that was imposed on 23 March fully impacted. The British Retail Consortium has reported that shopper footfall has fallen by 83% since the government closed non-essential retail outlets in March.
The balance of retailers reporting year-on-year growth in sales volumes slumped to -55% in April from -3% in March and a 10-month high of +1% in February. This matched the record low seen in December 2008. The modest drop in March had reflected the fact that the survey was carried out before many of the restrictions including the lockdown had been imposed.
The CBI reported that 67% of retailers had reported a big hit from coronavirus and 39% had closed completely.
Unsurprisingly, retailers are pessimistic about sales prospects for May with a balance of -54% expecting sales to be up year-on-year in the month. This was the weakest expectations balance on record.