Sales up across convenience sector but future remains uncertain

Food and drink sales during June were very strong, increasing optimism among retailers. But the long-term picture remains uncertain.

On Tuesday this week the CBI said that more than half of retailers taking part in its high street survey said that sales were up during June, providing the most positive figures since June 2007.

The CBI’s sample includes 20,000 outlets owned by 131 companies and it works by adding up those retailers reporting an increase and taking away those who say sales have fallen.  In June the figure was plus 33 per cent (51 per cent take away 18 per cent), which was much better than the plus 11 per cent figure that retailers had been forecasting.

Looking forward, the forecast for August is plus 45 per cent, which if achieved will be the best result since June 2004.

“Retailers are optimistic that strong sales growth will continue next month, which is promising,” said Lai Wah Co, the CBI’s economist.

“We still expect the recovery in overall consumer spending to be fairly restrained, however, given concerns about the impact of public spending cuts and weak prospects for real take-home pay in the coming year.”

Across London, Brandon Leigh, finance director of PZ Cussons, was offering the following prognosis: “Unemployment is rising and consumers will be quite discerning in where they spend their money. There’s acceptance that your basic shower gel and your basic handwash will be on promotion at £1 for quite a time.”

There is not much difference between Ms Co’s and Mr Leigh’s prognosis. However, convenience retailers can afford to be optimistic as top-up food shopping and smaller treats are less likely to be hit as shoppers change their habits.