Christmas comes early for UK retailers with strong November sales

·Reporter
·3-min read
Christmas comes early for UK retailers with strong November sales
Despite the rising number of people shopping on UK high streets, Brits were faced with the biggest price rises in more than thirty years due to supply chain shortages, rising raw material costs and wage pressures. Photo: Henry Nicholls/Reuters

A rising number of people hit the UK high streets for early Christmas shopping this month as retailers reported the strongest pre-Christmas demand since 2015.

The Confederation of British Industry’s (CBI) quarterly Distributive Trades Survey, its monthly retail sales balance, which looks at whether retailers think annual sales growth is rising or falling, climbed to a three-month high of 39 in November, up from 30 in October.

A separate measure of sales soared to 35 from -1, its highest since September 2015, as shoppers brought their purchases forward amid fears of shortages.

Clothing and department stores in particular saw a big upward swing in sales volumes, while "other normal goods" such as jewellery, flowers and homeware also improved during the period.

The survey of 125 companies, including 51 retailers, found that online sales were lower than a year ago, falling for the first time in the survey’s 20-year history. This was due to the second national lockdown in November 2020 forcing non-essential shops to close, with people confined to their homes once again.

The CBI said internet sales are forecast to rise in December as the festive season draws closer.

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However, the data also found that British shoppers were faced with the biggest price rises in more than thirty years due to supply chain shortages, rising raw material costs and wage pressures.

Selling prices this month grew at the fastest pace since May 1990, with as many as 77% of firms reporting higher prices than a year ago. The CBI added that prices are expected to grow at a broadly similar pace next month.

Retailers were less worried about supply shortages this month, however. Stock levels in relation to expected sales were broadly adequate (-2% from -23%), having hit a series of record lows this year.

“It seems likely that reports of supply chain disruptions prompted consumers to start their Christmas shopping early. And there are encouraging signs that retailers’ efforts to help avoid any festive disappointments may be paying off, with stock levels seen as adequate for the first time in seven months,” Ben Jones, CBI lead economist, said.

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Total employment grew in the year to November, the research also revealed, the first time that headcount in the retail sector has risen since November 2016, with a similar rate of growth expected next month.

Optimism in the sector likewise rose, with the balance of retailers expecting an improvement in conditions over the next quarter, the most positive November 2016. Meanwhile, investment intentions for the year ahead rose strongly for the third consecutive quarter, albeit at a slightly slower pace than last quarter.

Jones added: “Overall, retailers are becoming more optimistic, with both employment growth and investment intentions picking up strongly. Cost pressures remain a very real concern, however, with selling prices growing at the fastest pace since 1990.”

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