The summer sales have so far failed to lure South East shoppers back onto the high street, as sales volumes in July fell particularly sharply, while the outlook for August remains bleak, according to the CBI.

Director of CBI South East Malcolm Hyde said: “It is turning out to be a very grim summer for many retailers. Pressure from higher fuel and food prices is prompting many people to rein in their spending, proving that value retailing has never been more important.

“The faltering housing market has really depressed sales of home furnishings and white goods this month and the high street is still struggling, but supermarkets are faring better.

“The retail sector will have to focus more than ever on providing good value to customers if they want to keep the sun shining this summer.”

Sixty one per cent of respondents to the CBI’s latest Distributive Trades Survey reported that sales in the first half of July were lower than a year ago, while 25 per cent said sales had increased.

The resulting balance – where a balance is the difference between the percentage of retailers reporting an increase and those reporting a decrease – of –36 per cent was the weakest since the survey began in 1983, and confounded expectations of a gentler decline (-7%). A similar fall in sales volumes is expected in August (-32%).
The three-month moving average of sales volumes, which smoothes out monthly volatility, continued on the downward trend that started last summer. The balance of –20 per cent was the weakest since November 2005 (-26%).

Sales for the time of year were reported as poor by a balance of 46 per cent of firms, which was worse than expected (-17%), and similarly poor sales are predicted in August (-37%).

The weak sales have echoed up the supply chain and hit the volume of orders placed with suppliers. A balance of 37 per cent reported a year-on-year fall in order volumes, which is a much sharper deterioration than was expected (-13%). Stock levels were seen as more than adequate to cover expected demand by a net 20 per cent of firms.

Examining the individual sectors, demand for big-ticket items was especially weak, with every respondent selling durable household goods and furniture and carpets reporting that sales were down on a year ago. Clothing retailers also endured another poor month.

Grocers, including supermarkets, and footwear and leather retailers were the only sectors to report year-on-year sales growth.

Hopes of modest sales volume growth in the wholesaling sector were not realised, and instead the sector reported a decline that is set to continue in August at a similar rate. Builders’ merchants had a difficult July, but sales grew strongly for industrial merchants.

After unusually strong growth earlier this year, sales volumes in the motor traders sector fell for the second consecutive month, but at a significantly sharper rate, while the outlook for August is similarly weak.