The UK retail sector experienced a significant downturn in November 2024, with sales volumes dropping by 18%, according to the CBI Distributive Trades Survey. This decline extends the 6% drop reported in October and surpassed market expectations of a 14% fall. The latest figures highlight growing challenges for retailers as economic uncertainty and reduced consumer spending take their toll.

A Worrying Trend in Retail Performance

Retail sales have been on a downward trajectory, with November’s sharp decline marking a concerning acceleration. While a slowdown was anticipated, the 18% drop exceeded expectations and raised alarms across the sector. Retailers now face the dual challenge of managing reduced foot traffic and adjusting to weaker consumer confidence as the holiday season approaches.

Sentiment Hits a Two-Year Low

Adding to the sector’s woes, overall sentiment among retailers for the next three months dropped to its lowest level in two years. This negative outlook has led many to predict a further deterioration in annual sales, particularly as December — traditionally a crucial month for the retail calendar — draws near.

Employment and Investment Take a Hit

The survey also revealed a continued decline in retail employment, reflecting the strain on businesses to maintain staffing levels amid reduced revenues. Additionally, investment plans for the next year are being scaled back, with many retailers adopting a cautious approach to navigating the uncertain economic landscape.

Easing Price Inflation Offers Some Relief

One bright spot in the survey was a moderation in selling price inflation, which remained below average for the third consecutive quarter. While this trend may offer some relief to consumers, it highlights the pressure on retailers to compete on price in a challenging market. As the sector braces for December, the ability to adapt to shifting consumer behavior will be key to stabilizing the situation.