Retail sales, Great Britain: March 2015

• Year-on-year estimates of the quantity bought in the retail industry continued to show growth for the 24th consecutive month in March 2015, increasing by 4.2% compared with March 2014. This was the longest period of sustained year-on-year growth since May 2008 when there were 31 periods of growth

• The underlying pattern in the data as suggested by the 3 month on 3 month movement in the quantity bought continued to show growth for the 25th consecutive month, increasing by 0.9%. This equals the longest period of sustained growth since November 2007 when there were also 25 periods of consecutive growth

• On the month, the quantity bought decreased by 0.5% compared with February 2015. The largest decrease was reported by petrol stations which fell by 6.2%

• Average store prices (including petrol stations) fell for the 9th consecutive month, falling by 3.1% compared with March 2014. The largest contribution to the year-on-year fall once again came from petrol stations which fell by 12.8% and is the 19th consecutive month of year-on-year falling prices in this store type

• In March 2015, the amount spent in the retail industry increased by 0.7% compared with March 2014 but decreased by 0.3% compared with February 2015. Non-seasonally adjusted data show that the average weekly spend in the retail industry was £6.9 billion, compared with £6.7 billion in March 2014 and £6.6 billion in February 2015

• The value of sales made online decreased by 0.8% compared with February 2015 and accounted for 11.7% of all retail sales in March 2015. Online sales increased by 10.3% compared with March 2014

• Revisions in this release were caused by the incorporation of late data. The earliest revisions point for current price, non-seasonally adjusted data was March 2014. 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 1 March 2015 to 4 April 2015. Unless otherwise stated, the estimates in this release are seasonally adjusted.

Users are reminded that the figures contained in this release are estimates based on a monthly survey of 5,000 retailers, including all large retailers employing 100 people or more.

The quality of the estimate of Retail Sales

Retail sales estimates are produced from the monthly business survey – 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 March 2015 was 60.9% of questionnaires, accounting for 93.5% 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 of this bulletin and in the quality tables (184 Kb Excel sheet) of this release.

It should be noted that 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 on our website.

For different ways to access the data see the reference tables section on our website. These include:

• non-seasonally adjusted and seasonally adjusted volume and value indexes by industry

• year-on-year and month-on-month growth rates by industry

At a glance

In March 2015, the quantity bought in the retail industry (volume) increased by 4.2% compared with March 2014. The amount spent (value) increased by 0.7%. In March 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 3.1%. More information on how the implied price deflator is calculated can be found in section 3 of the background notes.

Amount spent in the retail industry

In the 5 week reporting period for March 2015, the amount spent in the retail industry was £34.3 billion (non-seasonally adjusted). This compares with £26.4 billion in the 4 week reporting period for February 2015 and £33.7 billion in the 5 week reporting period for March 2014.

This equates to an average weekly spend of £6.9 billion in March 2015, £6.6 billion in February 2015 and £6.7 billion in March 2014.

Figure 1 shows how the quarter on same quarter a year earlier growth in the volume of retail sales was affected by the economic downturn in 2008, and highlights the strong growth since 2013.

Three distinct periods emerge from Figure 1. In the years preceding the downturn, growth in the retail sales was strong. Between the first quarter of 2006 and 2008, the volume of sales increased by 5.8%, or by 0.7% per quarter on average.

However, between January 2008 and January 2013, the volume of retail sales remained flat: quarters of expansion were matched by quarters of contraction, and as a result the same volume of sales was recorded at the beginning and end of the period. This weakness is partly explained by the economic climate. Over this period, growth in average weekly earnings was consistently lower than growth in inflation, which implies that earnings fell in real terms. Real household disposable income, which includes the effect of taxes and benefits, was also broadly flat over the period. However, the value of retail sales continued to grow, increasing by 12.1% over the period, reflecting rising prices between these dates.

The third period shown in Figure 1 starts in 2013, when growth in volume terms began to increase notably. The volume of retail sales in quarter 1 (Jan to Mar) 2015 was 8.8% higher than it was in the same quarter of 2013; corresponding to an average growth rate of 1.1% per quarter, substantially faster than in the years preceding the downturn. This is perhaps surprising given the economic climate; growth in disposable income was still weak, and average weekly earnings grew slower than the Consumer Price Index (CPI) .

However, in contrast to the economy as a whole, prices in retail outlets began to fall in 2013 and this fall accelerated throughout 2014 and coincided with the increasing growth in retail sales over this period. In addition, this upturn in spending has been accompanied by a decline in the savings ratio, from an average of 8.5% over the period 2008 to 2012, to an average of 6.2% from 2013 onwards.

This month was the first since June 2014 in which the value of retail sales rose more than the volume, implying an increase in prices, although retail prices are still down significantly on the year. The factors driving this are discussed in the April 2015 Economic Review.

This is in contrast to the CPI, which did not change between March 2014 and March 2015. Figure 2 plots the 12 month growth rate of each series. The retail sales implied deflator and the CPI tend to move closely together, however differences in coverage mean that they are not identical. One important source of divergence is the inclusion of services in the CPI. The price of consumer services has been rising much faster than the price of goods recently and as services are not included in retail sales, this has had the effect of making growth in the CPI significantly higher than in the implied deflator.

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 March 2015, for every pound spent in the retail industry:

• 42 pence was spent in food stores

• 41 pence in non-food stores

• 6 pence in non-store retailing

• 11 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.

Figures 3 and 4 show the contribution of each sector to the quantity bought (volume) and amount spent (value) in the retail industry between March 2015 and March 2014.

In March 2015, 3 out of the 4 main retail sectors (non-store retailing, non-food stores and predominantly food stores) saw an increase in the quantity bought (volume). The largest contribution came from the non-food stores sector.

In March 2015, 3 out of the 4 main sectors (non-store retailing, non-food stores and food stores) contributed to the increase in amount spent (value). The largest contribution came from the non-food stores sector.

Main points:

• in March 2015, all store types except petrol stations showed increases in the quantity bought compared with March 2014

• all store types except other stores and petrol stations showed increases in the amount spent year-on-year, the fall in the amount spent in petrol stations was the lowest since July 2009

• in March 2015, all store types saw falls in average store price compared with March 2014

When looking at the 3 month on 3 month volume growth in the retail industry this has been sustained and has spanned 25 consecutive months. This equals the last longest run of growth in the 3 month on 3 month series which ended in November 2007. Looking at the quarter months of March, June, September and December we find that the last time we saw a quarter-on-quarter contraction was quarter 4 (Oct to Dec) 2012.

Looking now at the longer-term picture as seen in Figure 5, we see that as with the growth seen between quarter 4 (Oct to Dec) 2005 to quarter 3 (July to September) 2007, this latest span of growth is strong. However, if we compare the growth rates between the start of each span to the end point, we find that this latest 25 month period (quarter 1 (January to March) 2013 to quarter 1 (January to March) 2015) showed growth of 8.8% compared with a growth of 7.1% (quarter 4 (October to December) 2005 to quarter 3 (July to September) 2007).

Between these 2 periods of growth, from the end of 2007 as we moved into the economic downturn, all retailing was essentially flat until quarter 1 (Jan to Mar) 2013.

Looking at the 2 main contributors within the retail sector, food and non-food, which equate to approximately 83 pence of every pound spent in the retail industry, we see that before the economic downturn in 2008, most of the growth in all retailing came from food stores, but the quantity bought at non-food stores increased at a much more rapid pace. During the economic downturn as with all retailing both were essentially flat. Since quarter 1 (January to March) 2013, the growth in all retailing has mimicked that of non-food stores, food stores were flat and have only began to show an increase towards the latter part of 2014. So the question arises as to what has contributed towards this change?

Figure 6 shows the prices of goods sold and the quantity bought within these stores in more detail. Average prices in food stores increased rapidly since 2005 while the quantity bought remained fairly static, although in more recent quarters as prices have started to slow and even fall into deflation, the quantity bought began to rise slowly. This suggests that consumers continue to buy the same amount of food despite price rises. However, the opposite seems to be true of non-food stores where the average price has remained fairly static since 2005 while the quantity bought has increased rapidly, particularly since the end of the economic downturn. This suggests that consumers have been spending money in other stores with savings made by falling prices in other store types such as food and petrol stations.

Seasonally adjusted internet sales data are provided within this release. These seasonally adjusted estimates 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 2011=100.

Main points

• average weekly spending online in March 2015 was £766.9 million; an increase of 10.3% compared with March 2014

• the amount spent online accounted for 11.7% of all retail spending excluding automotive fuel, compared with 10.9% in March 2014

• the online spend in non-store retailers increased by 10.5% compared with March 2014; the lowest year-on-year increase in this store type since January 2014 when it increased by 10.0%

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.

Table 4 illustrates the mix of experiences among different-sized retailers. It shows the distribution of reported change in sales values of businesses in the RSI sample, ranked by size of business (based on number of employees). It shows that businesses with 40 to 99 employees saw the largest growth in the amount spent, comparing March 2015 with March 2014. Businesses with 100 and over employees experienced growth of 2.9%.

More information on the performance of the retail industry by store type and size can be found in the reference table, Business Analysis. This shows the extent to which individual businesses reported actual changes in their sales between March 2014 and March 2015. The table contains information only from businesses that reported in March 2014 and March 2015. Cells with values less than 10 are suppressed for some classification categories; this is denoted by c. Note that ‘large’ businesses are defined as those with 100 and over employees and 10 to 99 employees with annual turnover of more than £60 million. "Small and medium" businesses is defined as 0 to 99 employees.

The only international estimate of retail sales available for March 2015 was published by the US Census Bureau on 14 April 2015. In its advanced retail sales estimates for March 2015, the amount spent in the US retail industry, including motor vehicles and parts and food services, increased by 0.9% compared with February 2015 but increased by 1.3% compared with March 2014. Total sales for the 3 months to March 2015 were up 2.2% from the same period a year ago.

The latest estimates from Eurostat for February 2015 of the volume of retail trade across Europe decreased by 0.2% in the euro area (EA19) and remained stable in the EU28 when compared with January 2015. Compared with February 2014, the retail sales index increased by 3.0% in the EA19 and by 3.6% in the EU28. It should be noted that an accurate comparison cannot be made as Eurostat data are calculated on a 2010 = 100 basis, while GB data are now calculated on a 2011 = 100 basis.