Retail sales, Great Britain: September 2015

• Year-on-year estimates in the quantity bought in the retail industry continued to show growth for the 29th consecutive month in September 2015, increasing by 6.5% compared with September 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 22nd consecutive month, increasing by 0.9%

• Compared with August 2015, the quantity bought in the retail industry is estimated to have increased by 1.9%

• Average store prices (including petrol stations) fell by 3.6% in September 2015 compared with September 2014, the 15th consecutive month of year-on-year price falls

• The amount spent in the retail industry increased by 2.7% in September 2015 compared with September 2014 and by 1.4% compared with August 2015

• The value of online sales increased by 15.2% in September 2015 compared with September 2014 and increased by 4.5% compared with August 2015

• Revisions to this release were primarily caused by re-referencing the indices to 2012 = 100 to align with the National Accounts estimates (only affecting volume data) and the annual seasonal adjustment review. There were also revisions where late data was incorporated. 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 30 August 2015 to 3 October 2015, thus the August Bank Holiday is included within this release. 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 September 2015 was 62.4% of questionnaires, accounting for 90.3% 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 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 September 2015:

the quantity bought in the retail industry (volume):

• increased by 6.5% compared with September 2014

• increased by 1.9% compared with August 2015

the amount spent (value):

• increased by 2.7% compared with September 2014

• increased by 1.4% compared with August 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 3.6%.

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 5 week reporting period during September 2015, the amount spent in the retail industry was £35.1 billion (non-seasonally adjusted).

This compares with:

• £27.5 billion in the 4 week reporting period for August 2015

• £34.2 billion in the 5 week reporting period for September 2014

This equates to an average weekly spend of:

• £7.0 billion in September 2015, compared with

• £6.9 billion in August 2015

• £6.8 billion in September 2014

You should note that the August Bank Holiday in 2015 is included in this standard trading period but was not included in the September 2014 figures.

Main points

In September 2015:

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

• all store types except other stores and textile, clothing and footwear stores showed increases in the amount spent year-on-year

• all store types saw falls in average store price compared with September 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 September 2015 was £847.4 million; this was an increase of 15.2% compared with September 2014

• the amount spent online accounted for 12.8% of all retail spending, excluding automotive fuel, compared with 11.5% in September 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.

In recent periods, the average store price, as measured by the implied price deflator, for all retailing has fallen year-on-year and in September 2015 fell by 3.6% compared with September 2014, the joint largest fall with February 2015 since records began in January 1997 and the 15th consecutive year-on-year fall in average prices. This fall in average store prices was largely a consequence of falling fuel prices, however, all major store types saw store prices fall in September 2015.

As average store prices have fallen, the quantity bought in the retail sector has increased significantly. In September 2015, the year-on-year increase of 6.5% was the largest increase since November 2014 when it increased by 6.7% and now means that year-on-year the quantity bought has increased for the 29th consecutive month. Compared with May 2013, when this run of consecutive growth began, the quantity bought in the retail sector has increased by 10.3%.

The amount spent in the retail sector has also increased, however, due to the fall in average store prices in more recent months it has not increased at the same rate as the quantity bought as shown in Figure 1.

The performance of different store types varies, as shown in Figure 2 the quantity bought in food stores has been more consistent. In September 2015, the quantity bought in food stores increased by 3.2%, but this large year-on-year growth has not had the same impact as in all retailing.Compared with May 2013, the quantity bought in food stores has increased by 3.8% in September 2015, meaning that food stores has seen approximately one-third of the growth experience by all retailing.

Feedback from food stores suggests that some of the growth seen this period can be attributed to promotions centred around the Rugby World Cup.

The performance in non-food stores as shown in Figure 3 is similar to that of all retailing. In September 2015, the quantity bought increased by 6.5%, the 30th consecutive month of growth, and compared with May 2013, the quantity bought in non-food stores increased by 13.5%. Thus, much of the growth seen in the quantity bought in all retailing came from growth in the quantity bought in non-food stores.

Average store prices in non-food stores are more seasonal than for all retailers or food stores, reflecting sales periods that will be seen in clothing, department and furniture stores for example.

Spending at non-food stores could be viewed as discretionary, whereas spending in food stores could be viewed as essential. Thus, the more consistent picture in the quantity bought in food stores suggest consumers continue to purchase a similar amount of goods in these stores.

The latest quarterly national accounts (QNA) data suggest that real household disposable income increased by 5.2% in Quarter 2 (Apr to June) 2015 when compared with Quarter 2 (Apr to June) 2013, it appears that the extra money available to consumers may have been spent in non-food stores. Furthermore, if store prices continue to fall this will increase the money available to consumers.

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 September 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 September 2015 and September 2014.

In September 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 September 2015, 3 out of the 4 main sectors (non-store retailing, non-food stores and food stores) contributed to the increase in amount spent (value). The largest contribution came from the non-food stores 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 0 to 9 employees saw the largest growth in the amount spent in September 2015 compared with September 2014 (21.1%). Businesses with 100 and over employees showed growth of 2.5%.

More information on the performance of the retail industry by store type and size can be found in the Business Analysis reference table.

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 rose more strongly in September 2015.

Three distinct periods emerge from Figure 6. Between September 2006 and July 2008 retail sales volumes were experiencing continuous growth, although to a different degree, with the volume of sales increasing by 2.6% over the period as a whole. Growth in inflation (Consumer Prices Index) was lower than average weekly earnings over most of this period; this 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 value of retail sales continued to grow, increasing by 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.

Figure 7 plots the volume measures of the retail sales index (RSI) and the gross domestic product at market price (GDP), on a quarter on same quarter a year ago basis. Retail sales account for 5.7% of GDP and have a procyclical growth path, which means that during an economy’s expansion retail sales are generally growing, but they contract during less favourable economic conditions. This trend can be seen in Figure 7 with retail sales growing, although to a varying degree, between Quarter 3 (July to Sept) 2006 and Quarter 1 (Jan to Mar) 2008, when the economy was also growing. However, during the economy’s downturn (Quarter 1 (Jan to Mar) 2008 and Quarter 2 (Apr to June) 2009) the volume of retail sales declined. Between Quarter 1 (Jan to Mar) 2010 and Quarter 1 (Jan to Mar) 2013 the retail sales index experienced fluctuating growth, which coincided with a period of broadly stable growth in GDP albeit at a slower rate when compared to Quarter 1 (Jan to Mar) 2008. Since Quarter 2 (Apr to June) 2013 both GDP and RSI grew at a stronger rate, although there was a slight easing in growth in Quarter 2 (Apr to June) 2015.

In last month’s release the prices and volumes of the four main components of RSI were examined. In this month’s release we look at the value of internet retail sales, broken down into its main components as shown in Figure 8. Internet sales are included in the non-store retailing category of RSI, which accounts for 7.0% of all retailing. Internet sales can be broken into predominantly food stores, predominantly non-food stores and non-store retailing which account for 15.1%, 36.4% and 48.5% of all retailing respectively. Figure 8 shows that the value of all retailing excluding automotive fuel and the 3 categories of internet sales has been growing since January 2013, although to a different degree. In 2013 the value of non-store retailing was growing at a similar pace to all retailing excluding automotive fuels and at a slower rate than predominantly non-food stores. However, these trends were reversed in 2014 with non-store retailing becoming the fastest growing component of sales. Between January 2013 and September 2015 non-store retailing increased in value by 50.6%, compared with 42.7% for all retailing excluding automotive fuel. Over the same period predominantly non-food stores and predominantly food stores also saw an increase in their value but to a smaller extent at 37.0% and 32.2%, respectively.

The only international estimate of retail sales available for September 2015 was published by the US Census Bureau on 14 October 2015. In its advanced retail sales estimates for September 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 2.4% compared with September 2014. Total sales for the 3 months to September 2015 were up 2.3% from the same period a year ago.

The latest estimates of the volume of retail trade across the European Union, from Eurostat for August 2015, show the seasonally adjusted volume of retail trade remained stable in both the euro area (EA19) and EU28 when compared with July 2015. Compared with August 2014, the retail sales index increased by 2.3% in the EA19 and by 2.6% 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.