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Retail sales figures show continued growth, but food and drink sector still struggling

Published:  29 May, 2014

Retail sales showed steady growth for the sixth consecutive month in the year to May according to the Confederation of British Industry's (CBI) latest figures.

Sales volumes were up in May on a year ago for 38% of retailers, but 22% of retailers reported a decrease in volumes, netting a total of 16% increase overall, which was below market expectations.

Retail growth was at a slower pace than April, but retailers are expecting a faster rise in sales next month and 43% of retailers are expecting their sales volume to increase next month. 

Grocers did see a rise, however it is at a slower annual pace than the prior year, which is causing a decline in sales growth. 

"Although that growth was at a slower rate than expected, the fact we've seen a steady increase for six consecutive months is a sign we're heading towards sustainable growth and strengthening consumer optimism - and it's good to hear shopkeepers telling us they expect even stronger figures next month," said Barry Williams, the chair of the CBI Distributive Trade Survey Panel and Asda's senior vice president.

Due to recent price wars however several grocers are struggling. Tesco is bracing to report its worst quarterly trading in decades next week, according to the Financial Times. Barclays Capital and Deutsche Bank are both forecasting a 4% decline in sales from UK stores in three months to May 24. The major grocery multiples are in the midst of a price war, which although it may drive volume sales growth, value sales will take a hit. 

Morrison's also joined the price war early this month, by cutting the price on 1,200 everyday food essentials as part of £1 billion plan to permanently reduce prices.

Grocers that are currently cutting prices to attract footfall have to sell more products to bring the same amount of money through the store.

Independent retailers are struggling - with sales volumes decreasing in specialist food and drink retailers by 42%.