Retail sales, Great Britain: January 2016

Year-on-year estimates of the quantity bought in the retail industry showed growth for the 33rd consecutive month in January 2016, increasing by 5.2% compared with January 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 26th consecutive month, increasing by 1.4%.

Compared with December 2015, the quantity bought in the retail industry is estimated to have increased by 2.3%.

Average store prices (including petrol stations) fell by 2.6% in January 2016 compared with January 2015, the 19th consecutive month of year-on-year price falls.

The amount spent in the retail industry increased by 2.4% in January 2016 compared with January 2015 and increased by 2.3% compared with December 2015.

The value of online sales increased by 10.4% in January 2016 compared with January 2015 and increased by 2.7% compared with December 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 January 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 3 January 2016 to 30 January 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 January 2016 was 60.4% of questionnaires, accounting for 93.6% 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 (186.5 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

Get all the tables for this publication in the data section of this pub

At a glance

In January 2016:

The quantity bought in the retail industry (volume):

• increased by 5.2% compared with January 2015

• increased by 2.3% compared with December 2015

The amount spent (value):

• increased by 2.4% compared with January 2015

• increased by 2.3% compared with December 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 2.6%.

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 4 week reporting period during January 2016, the amount spent in the retail industry was £26.6 billion (non-seasonally adjusted).

This compares with:

• £44.7 billion in the 5 week reporting period for December 2015

• £26.0 billion in the 4 week reporting period for January 2015

This equates to an average weekly spend of:

• £6.6 billion in January 2016, compared with

• £8.9 billion in December 2015

• £6.5 billion in January 2015

Main points:

In January 2016:

• all store types showed increases in the quantity bought compared with January 2015

• all store types except petrol stations showed increases in the amount spent year-on-year

• all store types saw falls in average store price compared with January 2015

In department stores in January 2016 compared with January 2015:

• the quantity bought increased by 8.6%

• the amount spent increased by 6.6%

• average store price, as measured by the implied price deflator, decreased by 1.9%

Figure 1 shows the quantity bought, amount spent and average store price within department stores since January 2006. It shows that since early 2013 there was an underlying pattern of growth in this sector where the quantity of goods sold has steadily increased. The amount spent also increased while average store price decreased.

Looking at the longer-term picture, department stores saw the 34th month of consecutive year-on-year growth which is the longest sustained period of growth within this store type since the economic downturn in 2008.

In the most recent period, feedback from department stores suggests that some of the growth seen in January 2016 can be attributed to sales of Christmas stocks and ongoing promotions.

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 January 2016 was £863.5 million; this was an increase of 10.4% compared with January 2015

• the amount spent online in January 2016 in department stores increased by 28.0% compared with January 2015; this is the largest year-on-year growth since December 2013 (34.9%)

• the amount spent online accounted for 13.0% of all retail spending, excluding automotive fuel, compared with 12.0% in January 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)

In January 2016, 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.

Figure 2 shows the contribution of each sector to the quantity bought (volume) and amount spent (value) in the retail industry between January 2016 and January 2015 and Figure 3 shows the contribution of each sector to the quantity bought (volume) and amount spent (value) in the retail industry between January 2016 and December 2015.

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

In January 2016 compared with December 2015, all 4 main retail sectors contributed to the increase in quantity bought (volume) and amount spent (value). The largest contribution for both quantity bought and amount spent 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 40 to 99 employees saw the largest growth in the amount spent in January 2016 compared with January 2015 (13.9%). Businesses with 100 and over employees showed an increase of 2.3%.

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

Figure 4 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 rise in retail sales growth to 3.9% in the 3 months to January 2016, when compared with growth of 3.6% in the 3 months to December 2015. The growth in retail sales in January 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 4. Between January 2007 and July 2008, retail sales volumes were experiencing continuous growth, although to a different degree, with the volume of sales increasing by 1.4% 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 January 2007 and July 2008, consumer credit increased by 8.8%, 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 and as a result, broadly the same volume of sales were recorded towards the beginning and end of the period. This weakness may be partly explained by the economic climate over this period, which coincided with a reduction in consumer credit of 24.8% between August 2008 and May 2013. 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 4 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 14.1% between June 2013 and December 2015. 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 January 2016, the fall in prices eased slightly but the volume of retail sales continued to grow. 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.

Figure 5 compares the monthly compound average growth rate of all retail sales and its 4 main components in both the pre-downturn period (January 1997 to December 2007) and the post-downturn period (January 2010 to January 2016). In the post-downturn period all retail sales average growth eased by 0.1 percentage points compared with the pre-downturn period. This slowdown in growth is explained by the easing in growth seen in both predominantly food stores and predominantly non-food stores, which together accounts for 82.9% of all retail sales. However, following the economy’s downturn, automotive fuel and non-store retailing grew at faster rates compared with prior to the downturn, with the latter growing significantly faster (by 0.8 percentage points per month). The large increase in growth seen in non-store retailing following the downturn may reflect the composition of this component (companies that sell predominantly online or through mail order) and the changing spending pattern of consumers.

The only international estimate of retail sales available for January 2016 was published by the US Census Bureau on 12 February 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, increased by 0.2% from the previous month and increased by 3.4% compared with January 2015. Total sales for the 3 months to January 2015 were up 2.5% from the same period a year ago.

The latest estimates of the volume of retail trade across the European Union, from Eurostat for December 2015, show the seasonally adjusted volume of retail trade increased by 0.3% in the euro area (EA19) and increased by 0.1% in the EU28 when compared with November 2015. Compared with December 2014, the retail sales index increased by 1.4% in the EA19 and by 2.0% 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.