CBI warns UK retailers to prepare for disappointing Christmas sales

The CBI’s Distributive Trades Survey found that British retailers are bracing themselves for a disappointing holiday after they registered a decline in sales of 7.4% year-on-year in November.

In the year up to November, sales volumes declined less than in the month before. This is a sign of a bottoming-out in trading. Retailers expect another slight drop in December.

The employers’ group weighted average balance improved from -36% to -11% in October. A net -6% even smaller number of retailers anticipate a drop in sales for December.

CBI stated: “Retailers anticipate a disappointing holiday period. On average, a majority believe that sales will fall short of seasonal norms.”

After two years of high prices and cost-of living crisis, households are now tightening the belt. The wages are now outpacing the prices, but have not yet recovered all of their lost ground. The Office for Budget Responsibility (OBR), the government’s official forecaster, predicts that real household disposable income will be squeezed in the next five years to the greatest extent since the 1950s.

Martin Sartorius is the CBI’s chief economist. He said that retail sales had been in negative territory since 2023. This reflects the effect of household finances being stretched on the fortunes of the sector.

Although sentiment has improved slightly, firms still do not believe that an imminent revival of activity is on the horizon. It’s not surprising that firms are reducing their investment goals given the weak trading conditions.

According to the CBI survey, retailers have reduced their headcounts and are planning to reduce investments in the next twelve months. Conditions are improving. A small number of companies expect that their business conditions will improve over the next 3 months.

Last week, Chancellor Jeremy Hunt increased the business rate relief for small retailers by an additional year.