Retail sales, Great Britain: February 2016

Year-on-year estimates of the quantity bought in the retail industry showed growth for the 34th consecutive month in February 2016, increasing by 3.8% compared with February 2015.

The underlying pattern in the data, as suggested by the 3 month on 3 month movement in the quantity bought, showed growth for the 27th consecutive month, increasing by 0.8%.

Compared with January 2016, the quantity bought in the retail industry is estimated to have decreased by 0.4%.

Average store prices (including petrol stations) fell by 2.5% in February 2016 compared with February 2015, the 20th consecutive month of year-on-year price falls.

The amount spent in the retail industry increased by 1.4% compared with February 2015 and decreased by 0.7% compared with January 2016.

The value of online sales increased by 12.3% in February 2016 compared with February 2015 and decreased by 1.0% compared with January 2016.

Revisions to this release were caused by the incorporation of late data. The earliest revisions point for current price, non-seasonally adjusted data was February 2015. 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 31 January 2016 to 27 February 2016. 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 February 2016 was 66.2% of questionnaires, accounting for 94.7% 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 datasets 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 February 2016: the quantity bought in the retail industry (volume):

• increased by 3.8% compared with February 2015
• decreased by 0.4% compared with January 2016

the amount spent (value):

• increased by 1.4% compared with February 2015
• decreased by 0.7% compared with January 2016

Amount spent in the retail industry

In the 4 week reporting period during February 2016, the amount spent in the retail industry was £26.7 billion (non-seasonally adjusted).

This compares with:

• £26.6 billion in the 4 week reporting period for January 2016
• £26.4 billion in the 4 week reporting period for February 2015

This equates to an average weekly spend of:

• £6.7 billion in February 2016, unchanged from January 2016 and
• £6.6 billion in February 2015 

Main points:

In February 2016:

• all store types, except textile, clothing and footwear stores showed increases in the quantity bought compared with February 2015

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

• all store types saw falls in average store price compared with February 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 2.5%.

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.

In February 2016, the quantity bought in textile, clothing and footwear stores decreased by 2.4% compared with February 2015 and by 0.4% compared with January 2016.

The amount spent in February 2016 decreased by 2.8% compared with February 2015 and by 0.6% compared with January 2016. Average prices in store as measured by the implied price deflator, decreased by 0.5% year-on-year.

Feedback from retailers suggests that sales of their spring and summer collections have been impacted by cold and wet weather.

Figure 1 shows the 3 month on 3 month movement in the quantity bought and amount spent. Since early 2013, the pattern in the quantity bought and amount spent has been similar and after sustained underlying growth until mid-2015 the most recent periods have shown a steady decline.

In the quantity bought there was a fall of 3.4% in February 2016, the sixth consecutive period of 3 month on 3 month decreases. Similarly, in the 3 month on 3 month movement in amount spent there was a fall of 1.7% which was also the sixth consecutive period of 3 month on 3 month falls. For both quantity bought and amount spent these are the longest run of consecutive decreases since October 1991 when there were 7 periods of 3 month on 3 month falls.

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 February 2016 was £870.8 million; this was an increase of 12.3% compared with February 2015.

The amount spent online accounted for 13.1% of all retail spending, excluding automotive fuel, compared with 11.9% in February 2015.

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 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)

Figure 2 shows that for every pound spent in the retail industry:

• 40 pence was spent in food stores
• 43 pence in non-food stores
• 8 pence in non-store retailing
• 9 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.

In February 2016 compared with February 2015, all 4 main retail sectors saw an increase in the quantity bought (volume) while 3 of the 4 main sectors (food stores, non-food stores and non-store retailing) saw an increase in the amount spent (value). The largest contribution in the quantity bought came from food stores while the largest contribution in amount spent came from non-store retailing.

In February 2016 compared with January 2016, 3 of the 4 main retail sectors (food stores, non-food stores and petrol stations) saw a decrease in the quantity bought (volume) while 2 out of the 4 main retail sectors (food stores and petrol stations) saw a decrease in the amount spent (value). The largest contribution for both quantity bought and amount spent came from petrol stations.

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 February 2016 compared with February 2015 (6.1%). Businesses with 100 and over employees showed an increase of 0.8%.

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

Figure 5 compares a rolling 3 month period with the same period in the previous year and highlights that the volume of retail sales started to grow strongly from mid-2013. The latest data show a drop in retail sales growth to 3.7% in the 3 months to February 2016, when compared with growth of 3.9% in the 3 months to January 2016. The growth in retail sales in February 2016 was slightly slower than the rates seen throughout most of 2015, but was higher than just before the economy’s downturn (between 2007 and 2009).

Three distinct periods emerge from Figure 5. Between February 2007 and July 2008, retail sales volumes were experiencing continuous growth, although to a different degree, with the volume of sales increasing by 0.3% over the period as a whole. Growth in inflation (Consumer Prices Index CPI) 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. Moreover, between February 2007 and July 2008, consumer credit increased by 8.9%, which may have been a factor driving retail sales growth.

However, between August 2008 and May 2013, the volume of retail sales fluctuated between periods of contraction and expansion, which may be partly explained by the economic climate over this period, and coincided with a reduction in consumer credit of 24.8%. Moreover, growth in average weekly earnings was lower than inflation over most of the period, which implies that earnings fell in real terms.

The third period shown in Figure 5 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. Moreover, since June 2013, consumer credit has followed a broadly upward trend, growing by 14.7% between June 2013 and January 2016. In mid-2013, prices in retail outlets began to fall and this accelerated throughout most of 2014 and 2015, coinciding with higher growth in the volume of retail sales over this period. In the first 2 months of 2016, the fall in prices eased slightly but the volume of retail sales remained above 2015 levels. 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 5.9% over the period 2013 to 2014.

Between 1997 and 2015, the volume of retail sales grew by 55.5%, which resulted in an 11.8% increase in the number of employee jobs in the industry, shown in Figure 6. This rise in employees has been driven by a 69.6% increase in the number of jobs worked by men in the industry. Despite a 9.1% fall in the number of jobs filled by female employees between 1997 and 2015, female employees continue to make up the larger proportion of workers in the industry.

Figure 7 further breaks down male and female employee jobs into those worked part-time and full-time in 1997 and 2015. The rise in male employees can be attributed to increases in both the number of part-time and full-time jobs worked, which rose by 61.6% and 76.2%, respectively. Over the same period the decrease in jobs worked by women has been driven by a 16.7% decrease in part-time jobs, which offset a 10.2% increase in full-time jobs.

The only international estimate of retail sales available for February 2016 was published by the US Census Bureau on 15 March 2016. In its advanced retail sales estimates for January 2016, the amount spent in the US retail industry, including motor vehicles and parts and food services, decreased by 0.1% compared with the previous month and increased by 3.1% compared with February 2015.Total sales for the 3 months to February 2015 were up 2.9% from the same period a year ago.

The latest estimates of the volume of retail trade across the European Union, from Eurostat for January 2016, show the seasonally adjusted volume of retail trade increased by 0.4% in the euro area (EA19) and increased by 0.8% in the EU28 when compared with December 2015. Compared with January 2016, the retail sales index increased by 0.6% in the EA19 and by 0.3% 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.