Retail Sector Struggles To Bring Christmas Cheer

Retail sector struggles to bring Christmas cheer with more
reports of declining sales

Home » Retail Sector Struggles To Bring Christmas Cheer

It’s been another tough month for retailers in the UK, highlighted by the November ONS report.  Somewhat unhelpfully, the ONS reporting period means that Black Friday hasn’t been captured in the November report, though seasonal adjustments have been applied, so we can remain hopeful that the much needed boost to sales that this shopping frenzy attracts will have taken place. 

Post By Craig Bennett -
CEO

Unsteady Sales


For the earlier period of November captured by the ONS, we’re once again looking at another month of unsteady sales which is triggering concern about what was once one of the most stable sectors in the UK.  The volume of sales fell by 0.6% compared to October, and by 0.4% when comparing the last three months year on year.  A poll by Reuters shows economists had expected to see healthy growth in November of around 0.3%, once again confirming the unpredictability of the UK retail sector.

In a continuing picture of decline, the amount spent in November compared to October declined by 0.3%.  There has also been a slowdown in growth in recent months with only around a 0.1% increase being reported.  In November, this turned into a 0.4% decline, the first decline since April last year.

In one of the biggest surprises of the November report, online sales as a proportion of retailing have also declined by 0.4% and now sits at 18.7%.  Along with non-food stores, these two areas have been the worst performing of the month.

Food stores have given a small glimpse of growth with an increase of 0.7% in the amount spent when looking at the last quarter and a contribution of 0.9 percentage points to the amount spent when looking at year on year growth.  However, the month on month picture highlights a decline in the quantity bought for this area of 0.2%.

Whilst online sales have dipped a little, they are still strong compared to last year with a 2.6% increase.  Non-store retailing is the most popular area for online spending, whilst department stores have experienced a significant drop of 17%, continuing a period of ongoing decline.

With Christmas fever starting to hit, Black Friday creeping into the days and weeks before actual Black Friday and early sales being launched from struggling high-street brands, we’d expect to see consumer spending at an all-time high for the year.  However, the data shows that consumer confidence is low, perhaps still a consequence of political uncertainty or perhaps a sign of the British public tightening their belt in the run up to Christmas.  It could, however, simply be that Black Friday is distorting the view of the month as the report only takes us to 23 November. 

Whilst the ONS isn’t yet reporting on the impact of Black Friday, early indications are positive.  Barclaycard, which processes nearly £1 of every £3 spent in the UK, says that sales volumes from 25 November to 2 December were up 7.1% compared with 2018, while sales value rose by 16.5%.  Shoppers took full advantage of the discounts on offer; on Black Friday itself, sales volumes were 7.2% higher compared to last year and this continued right though to Cyber Monday where Barclaycard saw sales increase 6.9% compared to 2018 data.

According to Springboard, footfall across the UK highstreet has also seen a welcome boost with a rise of 3.1% in physical shoppers, with shopping centres seeing 5.2% more visitors than 12 months ago.

Conclusion


It’s tempting to try and reflect on the year at this point, however we cannot ignore the impact that Black Friday, Cyber Monday and the weeks surrounding these two days have on the retails sector as a whole.  From an increase in footfall in bricks and mortar stores, to higher online spending, we know that there will be a different story to tell in January as we reflect on the final period of 2019.  For that reason, I’m going to hold my thinking, and my breath, and hope that as we begin a new year, we can round off 2019 on a more positive note. 

Whether you are a fan of making New Year resolutions or not, perhaps we all need to commit to supporting our high-street and local producers a little more to make sure we still have a retail sector to report upon!

 

Read the ONS Report for November


Sales in the UK retail sector fell 0.1% last month (October) according to data released on Friday by the ONS, challenging the view that the retail landscape is finally settling after a few tumultuous months./p>

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