Retail sales, Great Britain: October 2015

• Year-on-year estimates in the quantity bought in the retail industry show growth for the 30th consecutive month in October 2015, increasing by 3.8% compared with October 2014.

• The underlying pattern in the data, as suggested by the 3 month on 3 month movement in the quantity bought, showed growth for the 23rd consecutive month, increasing by 0.9%.

• Compared with September 2015, the quantity bought in the retail industry is estimated to have decreased by 0.6%.

• Average store prices (including petrol stations) fell by 3.3% in October 2015 compared with October 2014, the 16th consecutive month of year-on-year price falls.

• The amount spent in the retail industry increased by 0.5% in October 2015 compared with October 2014 and decreased by 0.7% compared with September 2015.

• The value of online sales increased by 11.2% in October 2015 compared with October 2014 and decreased by 0.8% compared with September 2015.

• Revisions to this release were caused by the incorporation of late data. The earliest revisions point for current price, non-seasonally adjusted data was October 2014. More information on revisions can be found in the background notes.

This bulletin presents estimates of the quantity bought (volume) and amount spent (value) in the retail industry for the period 4 October 2015 to 31 October 2015. Unless otherwise stated, the estimates in this release are seasonally adjusted.

The estimates in this release are based on a monthly survey of 5,000 retailers, including all large retailers employing 100 people or more and those with annual turnover of greater than £60 million who employ 10 to 99 people. It is estimated that this survey covers approximately 95% of all known retail turnover in Great Britain.

The quality of the estimate of retail sales

Retail sales estimates are produced from the monthly business survey – Retail Sales Inquiry (RSI). The timeliness of these retail sales estimates, which are published just 3 weeks after the end of each month, makes them an important early economic indicator. The industry as a whole is used as an indicator of how the wider economy is performing and the strength of consumer spending. Results are revised for the previous 13 published periods. More information about the data content for this release can be found in the background notes.

Revisions are an inevitable consequence of the trade-off between timeliness and accuracy. The response rate in October 2015 was 64.7% of questionnaires, accounting for 90.1% of registered turnover in the retail industry. Therefore, the estimate is subject to revisions as more data become available.

All estimates, by definition, are subject to statistical uncertainty and for the retail sales index we publish the standard error associated with the non-seasonally adjusted estimates of year-on-year and month-on-month growth in the quantity bought as a measure of accuracy. More information on these standard errors can be found in the background notes and in the quality tables (169 Kb Excel sheet) of this release.

We are continually working on methodological changes to improve the accuracy of the retail sales estimates; progress on these can be found on the continuous improvement page.

The reference tables offer different ways to access the data, they include:

• non-seasonally adjusted and seasonally adjusted volume and value indexes by industry

• year-on-year and month-on-month growth rates by industry

At a glance

In October 2015:

the quantity bought in the retail industry (volume):

• increased by 3.8% compared with October 2014

• decreased by 0.6% compared with September 2015

the amount spent (value):

• increased by 0.5% compared with October 2014

• decreased by 0.7% compared with September 2015

Non-seasonally adjusted data show that the prices of goods sold in the retail industry (as measured by the implied price deflator) decreased by 3.3%.

More information on how the implied price deflator and other estimates in this release are calculated can be found in section 3 of the background notes.

Amount spent in the retail industry

In the 4 week reporting period during October 2015, the amount spent in the retail industry was £28.8 billion (non-seasonally adjusted).

This compares with:

• £35.0 billion in the 5 week reporting period for September 2015

• £28.7 billion in the 4 week reporting period for October 2014

This equates to an average weekly spend of:

• £7.2 billion in October 2015, compared with

• £7.0 billion in September 2015

• £7.2 billion in October 2014

Main points:

In October 2015:

• all store types showed increases in the quantity bought compared with October 2014

• all store types except food stores, other stores, and petrol stations showed increases in the amount spent year-on-year

• all store types, except textile, clothing and footwear stores saw falls in average store price compared with October 2014

Seasonally adjusted internet sales data are published in the RSI Internet tables and include:

• a seasonally adjusted value index

• year-on-year and month-on-month growth rates

Internet sales are estimates of how much was spent online through retailers across all store types in Great Britain. The reference year is 2012=100.

Main points:

• average weekly spending online in October 2015 was £839.1 million; this was an increase of 11.2% compared with October 2014

• the amount spent online accounted for 12.8% of all retail spending, excluding automotive fuel, compared with 11.6% in October 2014

Table 3 shows the year-on-year growth rates for total Internet sales by sector and the proportion of sales made online in each retail sector.

The underlying pattern in the rolling 3 month on 3 month movement in the quantity bought shows sustained growth for 23 months, increasing by 0.9% in the 3 months to October 2015 compared with the 3 months to July 2015. This is the longest period of sustained 3 month on 3 month growth since records began in 1996.

Figure 1 shows the quantity bought in store remained fairly constant until late 2013 while the amount spent and average store price increased gradually. As average store price started to fall in late 2013 both the quantity bought and amount spent increased sharply. From late 2014 the quantity bought has increased at a higher rate than amount spent.

Figure 2 shows the 3 month on 3 month growth in the quantity bought for the main store types. Since late 2012 there has been a considerable increase in growth in non-store retailing, while growth in the other main sectors has remained fairly steady. It must be noted that the weight of non-store retailing in retail sales is much smaller at 7.0% than other sectors and the largest contribution came from predominantly non-food stores which has a weight of 42.0%. Looking at petrol stations, prices have been falling since mid-2013 and this has coincided with a steady increase in the quantity bought.

Figure 3 shows the 3 month on 3 month growth in the amount spent for the main store types. In the early part of the time series, growth was fairly consistent within predominantly food stores and predominantly non-food stores and this trend has not changed significantly, however, non-store retailing and petrol stations show a different pattern. Within non-store retailing there has been a significant increase in the amount spent which is similar to the pattern seen in the quantity bought while the opposite is true of petrol stations where falls in prices have led to a significant fall in the amount spent.

The retail industry is divided into 4 retail sectors:

• predominantly food stores (for example, supermarkets, specialist food stores and sales of alcoholic drinks and tobacco)

• predominantly non-food stores (for example, non-specialised stores, such as department stores, textiles, clothing and footwear, household goods and other stores)

• non-store retailing (for example, mail order, catalogues and market stalls)

• stores selling automotive fuel (petrol stations)

In October 2015, for every pound spent in the retail industry:

• 41 pence was spent in food stores

• 42 pence in non-food stores

• 7 pence in non-store retailing

• 10 pence in stores selling automotive fuel

Using these as weights, along with the year-on-year growth rates, we can calculate how each sector contributed to the total year-on-year growth in the quantity bought.

Figures 4 and 5 show the contribution of each sector to the quantity bought (volume) and amount spent (value) in the retail industry between October 2015 and October 2014.

In October 2015, all 4 main retail sectors saw an increase in the quantity bought (volume). The largest contribution came from the non-food stores sector.

In October 2015, 2 out of the 4 main sectors (non-store retailing and non-food stores) contributed to the increase in amount spent (value). The largest contribution came from the non-store retailing sector.

Table 4 shows how sales varied among different-sized retailers. It shows the distribution of reported change in sales values of businesses (from the RSI sample), ranked by size of business (based on number of employees). Businesses with 40 to 99 employees saw the largest growth in the amount spent in October 2015 compared with October 2014 (14.4%). Businesses with 100 and over employees showed growth of 0.4%.

More information on the performance of the retail industry by store type and size can be found in the Business Analysis reference table (27.5 Kb Excel sheet).

Figure 6 compares a rolling 3 month period with the same period in the previous year, and highlights that retail sales started to grow strongly from mid-2013. Since January 2015, the rate of growth has experienced a general downward trend, but remains above rates seen just prior to the economic downturn. The latest data shows some easing in growth to 4.6% in the 3 months to October 2015 when compared with a growth of 4.9% in the 3 months to September 2015.

Three distinct periods emerge from Figure 6. Between October 2006 and July 2008 retail sales volumes were experiencing continuous growth, although to a different degree, with the volume of sales increasing by 1.7% over the period as a whole. Growth in inflation (Consumer Prices Index) was lower than average weekly earnings over most of this period; which resulted in rising real earnings, an indicator of the purchasing power of consumers.

However, between August 2008 and May 2013, the volume of retail sales fluctuated between periods of contraction and expansion, and as a result broadly the same volume of sales were recorded toward the beginning and end of the period. This weakness may be partly explained by the economic climate over this period. Growth in average weekly earnings was lower than inflation over most of the period, which implies that earnings fell in real terms. However, the volume of retail sales continued to grow (2.1% between August 2008 and May 2013) despite an increase in value of 12.9% over the period, reflecting rising prices between these dates.

The third period shown in Figure 6 started in June 2013, when growth in volume terms began to increase notably, despite average weekly earnings growing at a slower rate than CPI until September 2014. In 2013, prices in retail outlets began to fall and this accelerated throughout 2014 and 2015 and coincided with increased growth in the volume of retail sales over this period. In addition, this upturn in spending has been accompanied by a decline in the savings ratio, from an average of 9.0% over the period 2008 to 2012, to an average of 5.6% over the period 2013 to 2014.

“Predominantly non-food stores”, which account for 42% of all retailing, have had the largest positive cumulative contribution to retail sales between January 2013 and October 2015 and have been the main driver behind the growth in retail sales since January 2013. In this month’s release we will look into the 4 main components of “predominantly non-food stores” (“textile clothing and footwear stores”, “other non-food stores”, “non-specialised stores” (“department stores”) and “household goods stores”) in order to determine where the strength in growth is coming from.

“Predominantly non-food stores” and its 4 main components have experienced subdued price pressures with many of the components experiencing prolonged periods of price deflation (as measured by the implied deflator) between January 2013 and October 2015. These falls in prices have contributed to the increases in volumes seen on Figure 8. “Household goods stores” and “ other non-food stores” saw the fastest rate of price deflation on average at -1.5% per month, while the price of “textile, clothing and footwear stores” was more erratic, experiencing periods of inflation and deflation, which averaged to a moderate price inflation rate over the period as a whole.

Figure 8 shows that as a result of these decreases in prices between January 2013 and October 2015, “other non-food stores” and “household goods stores” have seen the largest increases in volume over this period at 19.9% and 19.5%, respectively. However “textile, clothing and footwear stores”, which saw only a moderate price inflation on average between January 2013 and October 2015, have seen the smallest increase in volume over this period at 7.1%.

The only international estimate of retail sales available for October 2015 was published by the US Census Bureau on 13 November 2015. In its advanced retail sales estimates for October 2015, the amount spent in the US retail industry, including motor vehicles and parts and food services, increased by 0.1% from the previous month and increased by 1.7% compared with October 2014. Total sales for the 3 months to October 2015 were up 2.0% from the same period a year ago.

The latest estimates of the volume of retail trade across the European Union, from Eurostat for September 2015, show the seasonally adjusted volume of retail trade decreased by 0.1% in the euro area (EA19) and increased by 0.3% in the EU28 when compared with August 2015. Compared with September 2014, the retail sales index increased by 2.9% in the EA19 and by 3.7% in the EU28. Note that an accurate comparison cannot be made as Eurostat data are calculated on a 2010 = 100 basis, while data for Great Britain are calculated on a 2012 = 100 basis.