A bumper January for retailers has turned into a lacklustre February as shoppers reacted to news of falling wage growth and the slowing economy by closing their wallets and deserting the high street.
The CBI’s quarterly survey of retailers found that sales dropped below normal in February and that shop owners expected next month to be even worse.
The business lobby group said its members in the retail industry were planning to slightly scale back investment spending this year after two quarters when firms expected to raise their capital outlay.
Retailers enjoyed a strong January, according to official figures, after cutting prices to clear stock, with sales rising at the fastest rate in two years. However, the benefits of stock clearance sales appeared to be short-lived, and in recent weeks given way to expectations of a tougher 2016.
Supermarkets were among the most pessimistic respondents to the CBI survey, saying that growth in the month ahead would be the weakest in nearly three years.
Retailers were gloomy despite a majority, including wholesalers, reporting that sales in February were up on the same month last year and that they expected an improvement in business conditions, which indicated higher orders and profitability over the next three months.
Rain Newton-Smith, the CBI’s director of economics, said: “Overall, conditions remain challenging for retailers. Although sales have continued to grow and optimism has risen, expectations for sales growth are lacklustre and retailers are still wary of investing. And unreformed business rates are making it tougher for retailers to open up new shops on the high street.”
via The Guardian