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Second wave ends surge in retail sales

Cardiff - Polly Thomas /Getty
Cardiff - Polly Thomas /Getty

Retail sales fell in October as the second wave shut down demand for clothes shops and department stores again.

Shops are braced for a grim winter, according to the CBI’s survey of retailers and wholesalers.

The share reporting a fall in sales in October compared with the same month a year ago outweighed those reporting a rise by a margin of 23pc.

That is the worst month since May, when non-essential retail was still closed.

Expectations for the future are also dire, with a net balance of 26pc expecting falling sales.

It shows renewed lockdowns are a growing threat to the economic recovery, as consumer spending has been a key driver of the rebound so far.

This is particularly dire for shops which depend heavily on strong demand before Christmas to boost their finances and keep them afloat for much of the rest of the year.

“The fall in retail sales in October is a warning sign of a further loss of momentum in the economy as coronavirus cases pick up and restrictions are tightened across many parts of the country,” said economist Ben Jones at the CBI.

“It’s no surprise that sales have dipped despite no new direct restrictions on retail in England, as the evidence from earlier in the year suggests consumers become more cautious as case numbers rise.

“With footfall still down by one third, many retailers face a difficult run-up to the all-important Christmas period. It is vital that local authorities use their discretion over the new tier 2 grant funding to target support in a way that helps keep town and city centres open for business.”

Clothes shops and general retailers such as department stores reported the worst falls in sales, as did specialist food and drinks sellers.

By contrast those selling furniture and carpets, DIY materials and recreational goods all had a good October, indicating that the first lockdown’s trends for home improvements and leisure could be repeating themselves.

Online sales are still growing strongly, with a net balance of 47pc of retailers reporting higher volumes over the internet, though that is not yet back to the pace of growth seen over July and August.