The UK retail industry has recorded the most prolonged period of falling sales since 2011. Business analysts have suggested the downfall is the result of the unhealthy business environment created by concerns surrounding Brexit. Reports by the Confederation of British Industry indicate that the sector experienced falling sales for the third month in a row in July.
Due to the high level of political uncertainty, and less than 100 days to go before Brexit, most department stores, clothes shops and retailers selling goods such as jewellery and flowers have seen a significant drop in sales.
A survey by 93 high street firms and wholesalers found that despite sales volumes falling overall in the year to July, the drop in July was smaller than in June. Retail firms are now being forced to reduce order quantities from their respective suppliers to avoid further losses. Furthermore, sales are projected to fall again in August.
Renowned economist Rain Newton-Smith says the fall in sales figures is alarming, with immediate action necessary. The economist’s sentiments are a clear illustration that the British economy is heading towards a fork in the road. She has urged the new prime minister to do whatever it takes to land a good Brexit deal for the sake of protecting jobs and the UK retail industry at large. Newton-Smith added that under such conditions, household budgets could be exposed to intense pressure should unemployment rates and the cost of living rise.
However, the Confederation of British Industry did record a slight improvement in sales from -42% in June to -16% in July. Even though it was a slight improvement, the difference remains in negative territory, although city economists had expected a reading of -10%. On the goods side, internet retail sales had increased from previous months, even though the volume bought online remained below the long-term threshold.
It’s worth bearing in mind that most economists tend to disagree with CBI’s retail sales predictions, deeming them too pessimistic. Recent figures indicate that retail sales have been resilient over the past few months. The Office of National Statistics, for instance, suggests that the retail sales volume went up by 1% in May. Sales were also reportedly up on the year by 3.8%, beating the forecasts of many city economists.