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Two-tier retail market continues in May


The two-tier retail marketplace that has emerged in post recession Great Britain continued in May, with new data showing that sales at grocery and fashion retailers are generally growing but trading for big ticket items is slowing.

According to the Confederation of British Industry (CBI) Distributive Trades Survey, retailers in the grocery, clothing and footwear sectors reported strong increases in sales during the first two weeks of May, while durable household goods and homeware sales slumped.

The percentage balance of grocery retailers reporting year-on-year growth in sales at the start of the month was +67 per cent, while it was +32 and +84 per cent for clothing specialists and footwear companies respectively.

CBI works out its figures by subtracting the percentage of retailers reporting a sales decrease from the percentage of companies indicating a sales rise during a given month.

With that in mind, it is worrying to note that the household goods and furniture & carpet sectors reported percentage balances of -59 per cent and -23 per cent respectively in May.

Lai Wah Co, Head of Economic Analysis at the CBI, said: “May’s results were better than retailers expected overall and broadly in line with seasonal norms, but there are great variations between the sectors.”

Trends noted in this month’s survey are supported by recent retail industry announcements, with Kantar Worldpanel revealing yesterday that overall grocery market growth increased by 4.8 per cent year-on-year in the 12 weeks to May 15th 2011.

In comparison, the household goods and homewares sectors have seen profit warnings from the likes of Dixons Retail and Carpetright, while Focus DIY went into administration at the start of May and today revealed that its unsold stock is to be liquidated.

The CBI study said that 41 per cent of retailers reported rises in sales volumes, while 23 per cent noted a decline. Although this percentage balance of +18 per cent is encouraging, the industry remains extremely cautious about the year ahead.

John Cridland, CBI Director-General, commented: “High street sales growth is subdued and is likely to remain sluggish for some time.

“Household budgets are being persistently squeezed by the gap between price inflation and weak wage growth.

“Given these challenging consumer conditions, it is good news that retail sales growth is stable, not falling.”

Published on Wednesday 25 May by Editorial Assistant

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