British retailers fear sales will slump next month at a rate not seen since the depths of the last financial crisis, as the coronavirus hits demand for almost everything other than food.
The Confederation of British Industry said its monthly survey of retailers – conducted before the government ordered the shutdown on Monday of almost all non-essential stores – showed the weakest outlook since April 2009.
The figures add to signs that Britain’s economy will shrink sharply in the coming months due to government measures to slow the spread of the coronavirus, which has so far killed 422 people in Britain and more than 18,000 worldwide.
Surveys on Tuesday of purchasing managers from the services sector showed a rapid global slowdown, with the main index for Britain – which does not include retailers – tumbling to its lowest since the series started in 1998.
Economists at Morgan Stanley predicted the economy would shrink by 10% in the three months to June, after Prime Minister Boris Johnson ordered Britons on Monday to stay home except to buy food, exercise alone or undertake essential work.
“The retail picture looks horrible and it will only get worse with most retailers now compulsorily closed. Online sales will likely come increasingly to the fore but they can only make up a limited amount of the lost business,” said Howard Archer, chief economist advisor to consultancy EY ITEM Club.
The CBI said sales in the first two weeks of March painted a mixed picture, with big falls in most categories but a surge in spending on food as Britons rushed to stockpile groceries, which led to shortages and long queues in supermarkets.
As a result the decline in March’s sales index was modest, dipping to -3 from February’s +1 – less of a drop than had been expected by economists polled by Reuters.
But the outlook for April was bleak at -26, the lowest since April 2009. The expected fall in demand is rippling through the supply chain, with retailers planning to cut orders by the most since 2009 too.
“These are extraordinary times for the retail sector,” CBI economist Ben Jones said.
“Grocers are seeing a temporary increase in demand because of coronavirus. But many other retailers are seriously suffering as households put off non-essential purchases and social distancing keeps people away from the high street,” he said.