UK Retail Stock Shortages Worst Since 1985 CBI Survey Shows

Stocks in retail channels are at their lowest levels in 36 years, according to data from the Confederation of British Industry (CBI) in its latest monthly monthly CBI Distributive Trades Survey.

While trading is described as average for the month of October, stock adequacy is the worst since 1985 when records began, according to the 123 companies surveyed by the CBI, of which 51 were retailers.

Retail sales and orders accelerated in the year to October compared to the year to September, but the CBI  says the rate of the pick-up is partly a result of the steep decline in sales in October 2020 when Covid cases were rising and social distancing measures were tightening.

Another base effect was seen in slowing internet sales, where comparisons with the previous year was against numbers boosted by the Covid-related surge in online shopping.

The surveyed companies expect sales to be above the seasonal average in November.

The resurgence in demand as the global economic recovery gathers pace has put immense pressure on supply chains, leading to port congestion and labour shortages as well as inflation.

Stock levels are expected to deteriorate further as the Christmas shopping season kicks into gear, leading to more shortages in the stores.

Wholesalers and motor trade report good sales

For their part, wholesalers reported sales above seasonal norms in October, broadly the same as September. They expect sales to remain good for the time of year in November, albeit to a lesser extent.

Motor traders also reported sales as good for the time of year, and better than last month – a trend expected to continue into November.

The CBI noted that stock levels in relation to expected demand were at a record low for the seventh consecutive month in October across the distribution sector as a whole. Stock adequacy is expected to improve only slightly in the year to November.

CBI economist: “stock shortages continue to bite”

CBI Principal Economist Ben Jones, commenting on the survey results, said: “The UK’s economic recovery has been pretty bumpy lately and the same seems true of the retail sector. Sales performance has jumped around in recent months, while stock shortages continue to bite.

“Disruption to supply chains, combined with staff shortages and uncertain public health conditions mean retailers are finding it difficult to plan for the winter ahead.

“It’s therefore crucial the Government remains agile to support the sector. The Chancellor has the opportunity at his upcoming budget to signal the government’s intent to reform the outdated business rates system, starting with more frequent revaluations and removing any disincentives for investment in energy efficiency and decarbonisation.”

Retail stock shortages: key survey findings

• Retail sales grew in the year to October, at a faster pace than last month (balance of +30% from +11%), with growth expected to accelerate further next month (+35%).
• Retail orders growth also accelerated compared with the year to September (+48% from +20%), but is expected to ease slightly next month (+41%).
• Retail firms saw sales in October as broadly average for the time of year (-1% from -11%) but expect sales to be above seasonal norms next month (+12%).
• Internet sales growth eased further below the long-run average in the year to October (+7% from +26%; average is +45%). A similar rate of growth is expected next month (+5%).

Wholesalers and motor trade

Wholesalers reported sales as being good for the time of year in October and to a similar degree as in September (+27% from +30%). Sales are expected to be above seasonal norms to a lesser extent next month (+17%).

Motor traders reported sales as above seasonal norms to a greater extent from last month (+57% from +29%) and expect further improvement in November (+61%).

Distribution

Stocks in relation to expected sales reached a survey record low for the seventh consecutive month (-31% from -23%), although a slight easing in stock pressures is expected next month (-27%).