CBI numbers: good times won’t last

For the first two weeks of June 58% of retailers reported sales rises while just 17% reported declines, giving a CBI distributive trades index of +42. 

The numbers from the CBI survey are very robust; indeed, the balance of +42 is the highest figure since December 2010. On a sector basis, grocers were the clear winner with a balance of +85, while clothing retailers’ balance was +69. While the numbers are encouraging and will provide some relief to the beleaguered high street it is worth putting some context around them.Firstly, much of the increase will be down to the Jubilee boost which, we know from other trading updates, had an extremely positive impact on the grocery market and a reasonably positive effect on the rest of the high street. Unfortunately, in our view this is something of a one-off, exceptional uplift that will not be repeated any time soon. While other summer events such as the Olympics and the on-going Euros may provide some minor relief, their impact will be meagre in comparison to that of the Jubilee.

Secondly, the CBI’s survey covers only the first two weeks of June – which included that important Jubilee period. We believe that trade has now normalised and that the final weeks of the month have been a much more challenging period for retail, and especially for fashion retail because of the continued unsettled weather. Put together as a whole, the month of June, while still positive, will be nowhere near as rosy as the CBI numbers suggest.

Thirdly, despite the ups and downs of the high street, the fact remains that household disposable income is under considerable pressure. Even if the willingness to splurge and splash out on a continued basis were present – we do not believe it is – the resources to do so are lacking.

Our view remains that although retail will see some good spots this year, the picture as a whole remains one of subdued trading.