Retail sector low continues

Retail sector has hit a record low

The retail sector has recorded its fastest year-on-year sales decline in 22 years, the second time this year that the sector has hit a record low, according to the latest indicators from the Confederation of British Industry (CBI).

While the CBI does not break out specific IT retailers, its Distributive Trades Survey revealed that all types of non-food retailers have experienced falling sales volumes over the year up to September.

The survey also revealed that it was the fourth month in a row that the retail sector has recorded sales well down on a year ago.

Victoria Rance, economist at the CBI, said: “The retail sector has experienced a clear slowdown since the end of 2004, which has been especially marked over the last few months.

This is despite the fact that earnings growth and consumer confidence remain reasonably firm.”

The survey was reinforced as high-street retailer Comet reported that results were down last week. Total turnover fell by 2.2 per cent compared with the same period last year, with like-for-like turnover decreasing by 4.8 per cent. The firm reported a loss of £3.3m in the first half of the year.

Jean-Noel Labroue, chief executive of Comet’s parent company Kesa, said: “As we predicted, the retail environment across our core markets has continued to be difficult, particularly in the UK.”

Helen Slinger, head of marketing at online technology retailer, Ebuyer, was more positive. “Although the high street is suffering at the moment, we are experiencing growth,” she said.

She claimed this growth was due to lower operating costs of running online rather than the high street.

“In a climate where the majority of consumers are buying IT products chiefly on price and PC prices are falling, the companies that develop the best strategies will ultimately be the ones to come through,” she said.

Rance agreed, and she added: “Official data has also found retail prices falling and evidence suggests that recent sales have been dependable on heavy d iscounting that will not be sustainable. The combination of rising costs and falling prices appears to be putting margins very much under pressure.”