The UK’s retail sector is experiencing a significant downturn, with sentiment among businesses plummeting to its lowest point in 17 years. This sharp decline is accompanied by a prolonged period of falling sales volumes, now extending for nine consecutive months, according to the latest CBI Distributive Trades Survey. Retailers are bracing for continued subdued demand and are scaling back investment and hiring plans in response to economic uncertainty and cautious consumer spending.
Key Takeaways
- Retail sales volumes have fallen for nine consecutive months.
- Retailer sentiment has seen its steepest decline in 17 years.
- Investment and hiring intentions remain historically weak.
- Online sales show a positive, albeit moderate, growth trend.
Declining Sales Volumes
In the year to November, retail sales volumes fell at a fast pace, with a weighted balance of -32%. This trend continued into June of the following year, where sales volumes contracted sharply at a rate of -46%, marking the ninth consecutive month of decline. Retailers anticipate this downward trajectory to persist, expecting sales to fall at a similar or even faster pace in the immediate future. Sales volumes for the time of year were judged as "poor" by a significant margin in both periods surveyed.
Worsening Retail Sentiment
Sentiment among retailers deteriorated significantly in November, reaching its sharpest fall in 17 years. A growing proportion of firms anticipate their business situation will worsen in the coming quarter. This pessimism is attributed to weak demand and mounting uncertainty, particularly in the lead-up to fiscal events like the Budget. Retailers are holding back on crucial business decisions due to this uncertain outlook.
Investment and Hiring Slowdown
In response to the challenging economic climate, retailers are planning to reduce both investment and hiring. Investment intentions have remained historically weak, showing negative balances for over three years. In the near term, firms expect to trim headcount at a slightly faster pace. This cautious approach to capital expenditure and employment reflects the broader economic headwinds affecting the sector.
Online Sales Offer a Glimmer of Hope
While overall sales volumes are down, online retail sales have shown a more positive trend. In the year to November, online sales volumes grew at a moderate pace, and this growth is expected to surge in December, reaching the strongest expectation since May 2021. Similarly, in June, online sales volumes rose slightly and are expected to continue growing in the following month, offering a partial offset to the broader decline.
Broader Distribution Sector Impact
The downturn is not confined to retail. Total distribution sales volumes, encompassing retail, wholesale, and motor trades, have also fallen significantly. Wholesaling sales volumes declined at a slower pace in June compared to previous months, but motor trades experienced a sharp contraction. Retailers are also reducing orders placed upon suppliers at a firm pace, indicating a broader slowdown in the distribution network.
Sources
- Steepest fall in retail sentiment in 17 years – CBI Distributive Trades Survey, Confederation of British Industry | CBI.
- Retail sales fall for the ninth consecutive month – CBI Distributive Trades Survey – June 2025, Confederation of British Industry.
