Jobs are being lost in the retail sector at the fastest pace since the financial crisis and business investment intentions are at record lows, the CBI has warned.
A survey by the employers’ organisation reported that conditions for retailers were continuing to deteriorate amid rising costs and volatile consumer spending. This uncertain backdrop has weighed on employment in the sector, which fell in May for the tenth consecutive quarter and at the fastest pace since August 2009.
Bricks-and-mortar stores have endured a difficult few years as online competitors continue to snap up market share. In the past year several big retail brands have collapsed into administration, including Debenhams and House of Fraser, with the collective loss of thousands of jobs, while the rise in technology, such as self-service tills, also has led to jobs being cut.
According to the British Retail Consortium’s most recent employment monitor, there was a 2.4 per cent year-on-year drop in the number of people employed in the sector in the first quarter. The total number of hours worked in retail fell by 2.7 per cent and a growing number of companies said that they planned further reductions in the next three months.
The uncertain outlook has discouraged businesses from investing in their operations. According to the CBI’s distributive trades survey, investment intensions have plummeted to their lowest level in the survey’s history. A net balance of -65 per cent of employers said that they had plans to invest in their company in the year ahead, down from -33 per cent in February.
Anna Leach, deputy chief economist at the CBI, said: “This month’s survey paints a dismal picture for retailers, who face a grim combination of tough trading conditions, Brexit uncertainty and a burdensome, outdated business rates regime, which collectively have pushed investment intentions to a record low.”
Retail sales fell in the year to May at the fastest pace since October 2017, the employers’ body said. A balance of 26 per cent of companies said that volumes were higher than a year ago, while 53 per cent reported a fall, giving a net balance of -27 per cent.
Retail sales figures for April from the Office for National Statistics revealed a less bleak picture for the sector. Although sales in April were flat compared with March, they grew by 1.8 per cent in the three months to April, the fastest pace since December 2016.
Online retailers selling clothing items drove the growth, with the warm weather helping to boost sales.