UK Retailers Suffer Worst Month Since 2008 As COVID Crisis Hits: CBI
British retailers suffered their biggest fall in sales since the 2008 financial crisis in the first half of April as the coronavirus kept shoppers at home and forced store closures, the Confederation of British Industry said on Tuesday.
Together with official figures for March and an earlier survey from the British Retail Consortium, Tuesday's numbers showed the sector was on track for a historic decline, as an earlier boost from the stockpiling of food fades.
"The lockdown is hitting retailers hard. Two fifths have shut up shop completely for now," CBI chief economist Rain Newton-Smith said.
Britain's total economic output could fall by more than a third in the second quarter of this year due to measures to slow the spread of COVID-19 that have closed most non-essential stores, the government's budget forecasters have said.
The CBI distributive trades survey's retail sales balance dropped to -55 in April from -3 in March, matching the series' record low set in December 2008. The expected reading for May is a record low -54.
Two thirds of all retailers said the coronavirus had hurt sales, and 44% said they had laid off staff temporarily, while 8% had made permanent job cuts.
"Near-term fundamentals for consumer spending have clearly taken a substantial downturn as a result of coronavirus," said Howard Archer of EY ITEM Club, which predicts a 15% fall in consumer spending during the second quarter.
While supermarkets benefited from consumer stockpiling in March, the CBI said this went into reverse in early April.
"Households may have been dipping into stockpiles built up prior to the lockdown or tightening their belts more generally as incomes take a hit," Newton-Smith said.
Figures from retail data company Kantar published on Tuesday showed a 5.5% rise in grocery spending in the four weeks to April 19, which included the run-up to the lockdown.
But official data for March last week showed the sharpest annual fall in overall retail sales volumes on record, with sales volumes down by 5.8% year-on-year, despite largely covering the period before the lockdown started on 23 March.
Many firms in the sector have reported a financial hit.
Marks & Spencer scrapped next year's dividend on Tuesday and said its city centre food stores and clothing and homeware sections were badly hit by the lockdown.
Travis Perkins, Britain's largest distributor of building materials, said its total revenue in the first three weeks of April was down by two thirds from the same period last year.
The British Retail Consortium said on 16 April that spending at its members dropped by more than a quarter in the first two weeks of the lockdown.
The CBI survey was conducted between 27 March and 15 April, and is based on responses from 70 retail chains.