Retail sales, Great Britain: September 2017

• The underlying pattern in the retail industry is one of growth; for the three-months on three-months measure, the quantity bought increased by 0.6%.

• In September 2017, the quantity bought in the retail industry decreased by 0.8% when compared with August 2017; non-food stores provided the greatest downward pressure following growth in August 2017.

• Year on year, the quantity bought in the retail sector increased by 1.2%, with non-food (household goods, clothing stores) and non-store retailing all providing growth.

• Store prices continue to rise across all store types and are at their highest year-on-year price growth since March 2012 at 3.3% (non-seasonally adjusted).

• Online sales values increased year-on-year by 14%, accounting for approximately 17% of all retail spending.

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

“September’s retail sales saw a monthly decline of 0.8%, reversing August's growth. However, there is a continuation of the underlying trend of steady growth in sales volumes following a weak start to the year, and a background of generally rising prices. These increased costs are reflected in the more rapid growth in the amount spent when compared with the quantity bought.”

This bulletin presents estimates of the quantity bought (volume) and amount spent (value) in the retail industry for the period 27 August 2017 to 30 September 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 an important 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 report.

Table 1 shows that in September 2017, estimates for the quantity bought (volume) and amount spent (value) in the retail industry decreased when compared with the previous month; reversing the growth in August 2017. Month-on-month comparisons can be volatile and a longer-term series can provide a more stable picture of what is happening in the retail industry (Figure 1).

Year-on-year retail sales increased, with stronger growth in the amount spent when compared with the quantity bought due to rising store prices.

The underlying pattern as seen in the three-month on three-month measure shows that growth in retail sales has slowed in recent times as seen in Figure 1.

Looking at the underlying pattern with the quarter-on-quarter movement, the quantity bought increased at a steady rate up to Quarter 3 (July to Sept) 2007, coinciding with relatively stable store prices. As consumers bought more goods during this period, the value bought increased steadily as a result.

Following this period of growth, the quantity bought was stable between Quarter 4 (Oct to Dec) 2007 and Quarter 1 (Jan to Mar) 2013. Consumers continued to buy the same quantity of goods, but with rising prices, spending within stores continued to increase steadily during this period.

As prices began to flatten in early 2013 and then decline, the volume returned to one of growth. As prices began to rise again in late 2016, a short period of contraction followed in Quarter 1 2017 for the quantity bought in stores, however, the movement returned to one of growth with two quarterly increases in Quarter 2 (Apr to June) and Quarter 3 of 2017.

The retail industry is divided into four retail sectors; food stores, non-food stores, non-store retailing and automotive fuel. Figure 2 shows the number of pence for every pound spent in the retail industry.

The chart shows that 40 pence is spent in food stores; 42 pence in non-food stores; 10 pence in non-store retailing and 9 pence in automotive fuel. Using these weights, we can determine the contribution each main sector has to the total retail estimate (Figures 3 and 4).

The quantity bought in non-store retailing was the main contributor to growth on the year, despite having the smallest weight of the four main sectors, accounting for approximately 9% of total retailing.

Non-food stores, as the largest contribution to total retail at 42%, contributed positively to growth at 0.4%; offsetting the declines seen for food and fuel stores. This maintains the pattern observed in the previous year to overall growth from this sector.

The amount spent in retail shows positive contributions to growth across all sectors; non-store retailing contributing the largest growth followed closely by non-food stores.

Looking at the monthly growth contributions for September 2017, non-food stores were the primary driver for the overall negative growth for both value and volume sales. Food stores also reported decreases in both measures, but to a lesser degree than non-food stores.

Petrol stations remained flat for the amount spent on the month but reported a fall in growth for the quantities bought. Non-store retailing was the only sector to show growth on the month.

Table 2 provides further detail of year-on-year and month-on-month value and volume growth as well as the year-on-year change in average store prices.

In September 2017, the quantity bought decreased by 0.8% when compared with August 2017, due to decreases in food, department stores, other stores and fuel.

When compared with September 2016, the quantity bought increased by 1.2% due to strong growth in non-store retailing.

Food stores

When compared with August 2017, the quantity bought and amount spent in food stores decreased by 0.6% and 0.3% respectively. On the year the quantity bought decreased by 1.2% whilst the amount spent increased by 1.6%, largely due to the increase in average prices of 2.8%.

Non-food stores

Non-food stores decreased on the month for both the quantity bought and amount spent and was the main contributor to the monthly decline in total retail sales.

Within non-food stores, the quantity bought in other stores provided the greatest downward pressure, decreasing on the month by 6.7%. Other stores include a range of store types including pharmaceutical, medical, cosmetic and toilet articles, watches and jewellery, telecommunications equipment and second-hand goods. This can result in volatile monthly movements in this sector.

Consumers continued to purchase goods within textile, clothing and footwear stores with a year-on-year increase of 7.2% in the quantity bought. This sector has experienced growth in 2017, following periods of year on year declines in 2016. The increase in the quantity bought in this sector while prices continue to rise has resulted in strong year-on-year growth in the amount spent in store, at 10.7%.

While household goods stores appear to show strong growth on the month at 3%, this sector can be volatile. The year-on-year growth of 1% shows a more stable, longer-term picture as the underlying trend in this sector remains relatively flat.

Non-store retailing

Non-store retailing was the only main sector to show growth when compared with the previous month. This follows a long term pattern of growth in this sector from early 2010, which has accelerated over recent periods. When compared with the same month a year ago, there are strong growths in the quantity bought (17.1%) and amount spent (20.7%), despite strong price increases.

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

In September 2017:

• average weekly spending online was £1.2 billion; an increase of 14% compared with September 2016
• the amount spent (value) online accounted for 17% of all retail spending, excluding automotive fuel, compared with 15.6 % in September 2016

The only international estimate of retail sales available for September 2017 was published by the US Census Bureau on 13 October 2017. In its advanced retail trade estimates for September 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 October 2017 for August 2017. This shows the seasonally adjusted volume of retail trade in both the euro area (EA19) and EU28 when compared with July 2017.

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 report 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

We have rebased our indices to 2015 equals 100 for September 2017.

The results of the seasonal adjustment review have been incorporated into the estimates for September 2017.