Retail sales, Great Britain: March 2017

• The 3 months to March shows a decrease of 1.4%; the third consecutive decrease for the underlying 3 month on 3 month pattern.
• Looking at the quarterly movement, the 3 months to March 2017 (Quarter 1) is the first quarterly decline since 2013 (Quarter 4).
• In March 2017, the quantity bought in the retail industry is estimated to have increased by 1.7% compared with March 2016 and decreased by 1.8% compared with February 2017; decreases are seen across the four main store types.
• Average store prices (including fuel) increased by 3.3% on the year, the largest growth since March 2012; the largest contribution came from petrol stations, where year-on-year average prices rose by 16.4%.
• Online sales (excluding automotive fuel) increased year-on-year by 19.5% and by 0.5% on the month, accounting for approximately 15.5% of all retail spending.

Commenting on today’s official retail figures, Kate Davies, ONS Senior Statistician said:

“Today’s retail sales figures show a decline on the month and on the three months to March, which coincides with quarter 1 in 2017. This is the first time we’ve seen a quarterly decline since 2013, and it seems to be a consequence of price increases across a whole range of sectors."

This bulletin presents estimates of the quantity bought (volume) and amount spent (value) in the retail industry for the period 26 February 2017 to 1 April 2017. Unless otherwise stated, the estimates in this release are seasonally adjusted.

The Retail Sales Index (RSI) measures the value and volume of retail sales in Great Britain on a monthly basis. Data are collected from businesses in the retail industry and the survey’s results are used to produce seasonally adjusted monthly, quarterly and annual estimates of output in the retail industry at current price and at chained volume measures (removing the effect of inflation). Unless otherwise stated all estimates included in this release are based on seasonally adjusted data.

The RSI is a key economic indicator and one of the earliest short-term measures of economic activity. It is used in the compilation of the national accounts and widely used by private and public sector institutions, particularly by the Bank of England and Her Majesty’s Treasury to assist in informed decision and policy making.

Summary information can be found in the Summary Quality and Methodology Information document.

Table 1 shows percentage changes for both the value and volume of sales in March 2017.

Whilst there was year-on-year growth in the quantity bought in March 2017, both the monthly and 3 month on 3 month growth rates showed decline. For the 3 month on 3 month volume series, this is the third consecutive period of negative growth.

The 3-month period ending March 2017 coincides with Quarter 1 (Jan to Mar) 2017 of the quarterly gross domestic product (GDP) output estimate. It marks the first negative contribution of retail sales to quarterly GDP growth since Quarter 4 (Oct to Dec) 2013, contributing negative 0.08 percentage points (to 2 decimal places).

The amount spent increased by 5.1% compared with the same period last year while there was a fall in monthly growth and a flat 3 month on 3 month series.

The fall in the quantity bought in the 3 months to March 2017 continues the downward trend seen since January 2017. The recent decline coincides with a consistent trend of increases in average store prices, with March 2017 seeing the highest price levels since December 2014. This upward trend is also reflected in the latest UK consumer price inflation publication, reporting recent price increases, particularly in food as well as clothing and footwear.

Figure 2 shows the underlying pattern for the quantity bought, amount spent and average store prices for all retailing as suggested by the 3 month on 3 month movement.

In the 3 months to March 2017, the quantity bought for all retailing including automotive fuel decreased by 1.4% while the amount spent remained stable. As the amount spent is a combination of the quantity bought and price of goods, if average store prices increase then unless there is a decrease in quantity bought, the amount spent is expected to increase. However, as the amount spent has remained steady, the impact of price increases has been offset by falls in the quantity bought.

Table 2 shows the percentage changes for the 3 month on 3 month volume and value of retail sales in March 2017.

Decreases in quantity bought were seen across all retail sectors except textile, clothing and footwear stores where sales volume increased by 1.9%, thus having the only positive contribution to overall growth. The largest decreases were seen in household goods stores and fuel stores at 3.3% and 3.1% respectively.

Anecdotal evidence from textile, clothing and footwear retailers suggests that increases in internet sales have contributed to growth. When comparing March 2017 with March 2016, internet sales in textile, clothing and footwear stores have increased by 28.1%; the largest year-on-year increase since August 2014.

Looking at the amount spent, increases in food stores, textile, clothing and footwear stores, and fuel stores offset decreases in all other sectors. The largest increases were seen in textile, clothing and footwear stores, whereas household goods stores saw the largest 3 month on 3 month fall.

In 2016, for every pound spent in the retail industry:

• 40 pence was spent in food stores
• 42 pence in non-food stores
• 9 pence in non-store retailing
• 9 pence in petrol stations

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 March 2017 compared with March 2016, all main retail sectors, except petrol stations, saw an increase in the quantity bought (volume) and amount spent (value). The largest contribution in both the quantity bought and amount spent came from non-store retailing.

Over the last 12 months, most retailers have seen general growth with the exception of other stores and fuel stores. Fuel stores show a decrease in the quantity bought while the amount spent increased, which coincides with large increases in average store prices in the sector.

The monthly picture, as shown in Figure 4, shows all main retail sectors saw a decrease in the quantity bought (volume) while there were decreases in all main sectors except food stores in the amount spent (value). The largest contribution to the decreases for both quantity bought and amount spent came from non-food stores.

March 2017 shows falls in the quantity bought across all store types except department stores and household goods stores with the amount spent showing a similar picture with decreases in all store types except food stores and department stores. This coincides with rising prices in all store types except fuel stores.

Internet sales are estimates of how much was spent online through retailers across all store types in Great Britain.

Table 5 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 March 2017:

• average weekly spending online was £1.0 billion; an increase of 19.5% compared with March 2016
• the amount spent online accounted for 15.5% of all retail spending, excluding automotive fuel, compared with 13.6% in March 2016

The only international estimate of retail sales available for March 2017 was published by the US Census Bureau on 14 April 2017. In its advanced retail trade estimates for March 2017, they include the amount spent in the US retail industry, including motor vehicles and parts and food services.

Eurostat also published their latest estimates of the volume of retail trade across the European Union on 4 April 2017 for February 2017. This shows the seasonally adjusted volume of retail trade in both the euro area (EA19) and EU28 when compared with January 2016.

Data for Northern Ireland are published by the Northern Ireland Statistics and Research Agency (NISRA).

It should be noted that accurate comparisons cannot be made against these or other international statistics due to a variety of reasons, including differences in methodology.

Our Monthly Business Survey (MBS) for retail sales measures output from the retail industry in Great Britain. It samples 5,000 businesses, with all businesses employing over 100 people or with an annual turnover of more than £60 million receiving an online questionnaire every month.

Further qualitative data or information and summary tables can be found in the attached datasets. This includes data on:

• response rates
• standard errors
• revision triangle
• distribution analysis

The Retail sales Quality and Methodology Information document contains important information on:

• the strengths and limitations of the data and how it compares with related data
• uses and users of the data
• how the output was created
• the quality of the output including the accuracy of the data