Consumer spending continues to defy expectations
ONS retail data for the month of April released on Friday (24th May) shows a mixed view of spending, with some clear winners and losers across the key retail areas but overall, it confirms a long-term trend of growth.
Despite a flat month-on-month view of spending in April, we are continuing to see improvements in retail growth across a quarterly and annual view as the myriad of factors supporting UK retail growth continue to hold.
According to the report, a 0.3% fall in spend was anticipated but didn’t materialise. Perhaps interestingly, we are still seeing the theme of warmer weather as a reason for a boost in sales, in this case for clothing, which has helped maintain a flat position. Confident year on year growth of 5.2% has been seen, with positive movement in all sectors apart from household goods and department stores.
For online, which has continued to steadily increase its share of the market throughout the year, there has been a notable increase year on year of 10.1% in all sectors, however sales fell for the amount spent compared to the month of March 2019. Perhaps a sign that the warmer weather is impacting more than just clothing sales as people switch away from their tech and embrace the great outdoors? I doubt this will cause too much panic however, as the ONS is also reporting that sales from online retailers has witnessed the highest quarter-on-quarter growth since records began, with data showing a 9.4% increase.
In a similar three-month view, non-store retailing also achieved a record high with growth of 9.4% and an increase in amount spend of 8.9%. This category is dominated by online so is to be expected given the growth we are consistently seeing in this space.
In a month where another high-street giant, Arcadia, has hit the news with the need to close stores and revisit its portfolio in light of declining sales, its clear that consumers are increasingly expecting a more sophisticated experience when spending their hard-earned cash that many traditional brands are struggling to transition to. This is another thread we are seeing in the ONS reports. Department and food stores are no longer the steady and reliable growth areas they were once known as and instead, those brands that are offer new and exciting customer experiences that embrace on and offline journeys are the ones who are thriving.
We must also recognise recent movement in the political landscape with changes to our leadership and a possible direction of travel for Brexit becoming clearer. Past experience of political and economic turmoil tells us that this may cause consumers to retreat back to more cautious spending habits which could cause the latter half of the year to look quite different to the more buoyant first six months we’re on track to record.
As the saying goes, retail needs to make hay while the sun (quite literally) shines as we wait to see what lies ahead in the coming months.
ONS Report for March
The ONS retail report for the month of March, confirms that retail sales have seen their largest year on year growth since October 2016. Sales (quantity bought) have increased by 6.7%, surprising many who expected to see a more cautious start to the year.
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