UK retailers warn of stock shortages extending into the autumn

Retailers have warned they could struggle to meet demand and fill shelves into the autumn after months of supply holdups sent stock levels plunging in July to record lows for a second consecutive month.

The CBI said its monthly survey of major businesses across the retail and wholesale sectors found that a spending spree on Britain’s high streets this month has stretched their ability to source vital supplies.

Retail sales grew at a rate well above the long-run average in the year to July, according to the CBI, while orders grew at the fastest pace since December 2010. Sales and orders are expected to continue growing at a robust pace next month.

However, the survey of 124 firms, including 51 retailers – conducted between 25 June and 15 July – found that stock levels compared with expected sales across the distribution sector reached the lowest point since 1983 for the second consecutive month.

Thousands of firms have reported difficulties with supplies following disruption at UK ports due to Brexit, red tape and Covid-19 restrictions. Labour shortages owing to the “pingdemic” demands for staff to self isolate after coming into contact with someone who tests positive for Covid-19, especially among road hauliers and delivery drivers, have also held-up supplies to warehouses and shops.

“The retail, wholesale and motor trades sectors all reported relative stocks as too low, with the situation expected to deteriorate further in August,” the report said.

According to a balance of responses from retailers, sales grew by 23% in July, only slightly down from 25% in June. Orders grew at the fastest pace since December 2010, up 49% from +30% in June. The balance is the weighted difference between the percentage of retailers reporting an increase and those reporting a decrease.

The CBI said internet sales, which have soared during the pandemic, stalled after a fall in the rate of growth from 21% in June, dropping to the weakest on record in July, of just 2%. Analysts had expected online sales growth to cool as people return to high street shops after lockdown.

Ben Jones, principal economist at the CBI, said: “While demand may be more stable, operational issues worsen. Relative stock levels are at a record low and expected to fall further still, while the number one worry for many firms at the minute is labour shortages throughout the supply chain as staff self-isolate.”