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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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MNI REALITY CHECK: UK Set For Modest Sales Lift, Downside Risk
UK retail sales likely edged modestly higher in September from the previous month according to City forecasters, but disappointing accounts from industry insiders suggest a degree of downside risk to that outlook.
Even a surprise to the upside is unlikely to prevent retailing from exerting a negative influence on overall third quarter output. After falling by 0.9% in August -- extending a 2.8% plunge in July -- sales must rise by an almost-unprecedented 12% in September to keep volumes in the black in the third quarter.
Underlining the tough end to the quarter for retailers, Ben Jones, principal economist at the CBI told MNI that September certainly slowed after running "red hot" over that summer. That pushed sales below seasonal norms "for the first time since March … and low stock adequacy remains a concern across the distribution sector," he said.
CHALLENGING
His outlook was echoed by Andrew Goodacre, CEO at the Independent Retailers' Association, who said September sales were "fairly flat."
"Retail has probably never been more challenging … we're dealing with things we'd never thought we'd deal with. [Shipping] prices have increased and it's difficult to pass one costs to customers, given online competition," Goodacre noted.
Internet sales are expected to show a modest pick-up, but will likely be below the
typical August-to-September rise of 6%, although online retailers are hopeful that early Christmas shopping -- in response to widespread reports of shortages -- may point to a brighter October.
But stock shortages may be a problem for a while, and Andy Mulcahy, strategy and insight director at IMRG "we may continue to see problems over the next six months."
SLUGGISH FOOD SALES
Food sales were sluggish, according to industry leaders, but could benefit from easier comparisons, after supermarket volumes declined by 1.2% in August and by 2.0% in July. But with pubs and restaurants reporting strong trading, sales of food to be consumed at home remained soft.
With no big calendar events to drive sales, the food and drink sector put in a lacklustre performance in September, according to Susan Barratt, at IGD. "It was an uneasy month for shoppers, with a continual flow of news around the availability of food and fuel," she said.
Clothing and footwear sales improved modestly, albeit from a low base, according to retailing insiders, boosted in part by back-to-school buying. Paul Martin, retail partner at KPMG said the high street saw less than 1% growth in September, "with sales falling back across every category other than apparel and beauty."
IT'S GAS, GAS, GAS
Petrol sales are a wildcard in the September data. While many drivers – particularly in the southeast – were unable to fill up their tanks, others may have purchased higher volumes than usual following reports of shortages, due to a paucity of HGV drivers.
Furthermore, widespread coverage of shortages may have dampened consumer confidence, according to some industry leaders.
"September saw the slowest retail sales growth since January, when the UK was in lockdown. There are signs that consumer confidence is being hit as the fuel shortages, combined with wetter weather, had an impact in the second half of the month," Helen Dickinson, CEO of the British Retail Consortium, said.
The median survey of City analysts points to a m/m rise of 0.9% and an annual decline of 0.4% for total September sales.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.