Retail sales, Great Britain: July 2015

• Year-on-year estimates of the quantity bought in the retail industry grew for the 28th consecutive month in July 2015, increasing by 4.2% compared with July 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, showed growth for the 29th consecutive month, increasing by 0.5%. This is the longest period of sustained growth since consistent records began in June 1996

• Compared with June 2015, the quantity bought in the retail industry is estimated to have increased by 0.1%. Increases were reported by department stores, other stores, household goods stores and non-store retailing offset by falls in predominantly food stores, textile, clothing and footwear stores and petrol stations

• Average store prices (including petrol stations) fell by 3.0% in July 2015 compared with July 2014; the 13th consecutive month of year-on-year price falls. All store types except textile, clothing and footwear stores reported decreases. Petrol stations again made the largest contribution, falling by 10.9%, the 23rd consecutive month of year-on-year falling petrol prices

• Amount spent in the retail industry increased by 1.0% in July 2015 compared with July 2014 but decreased by 0.2% compared with June 2015. The average weekly spend in the retail industry was £7.1 billion; non-seasonally adjusted data show this is unchanged from the previous month and the July 2014 figure

• The value of online sales increased by 13.0% in July 2015 compared with July 2014, however, there was no growth in July 2015 compared with June 2015. They accounted for 12.6% of all retail sales

• Revisions in this release were caused by the incorporation of late data. The earliest revisions point for current price, non-seasonally adjusted data was July 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 5 July 2015 to 1 August 2015. Unless otherwise stated, the estimates in this release are seasonally adjusted.

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 and those with annual turnover of greater than £60 million who employ 10 to 99 people.

The quality of the estimate of retail sales

Retail sales estimates are produced from the monthly business survey – Retail Sales Inquiry (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 July 2015 was 60.8% of questionnaires, accounting for 93.9% 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 and in the quality tables (165.5Kb Excel sheet) of this release.

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.

The reference tables offer different ways to access the data, they 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 July 2015, the quantity bought in the retail industry (volume) increased by 4.2% compared with July 2014. The amount spent (value) increased by 1.0%. In July 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 3.0%. 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 4 week reporting period during July 2015, the amount spent in the retail industry was £28.5 billion (non-seasonally adjusted). This compares with £35.7 billion in the 5 week reporting period for June 2015 and £28.3 billion in the 4 week reporting period for July 2014.

This equates to an average weekly spend of £7.1 billion in July 2015, unchanged from the previous month and the July 2014 figure.

Main points:

• in July 2015, all store types except other stores showed increases in the quantity bought compared with July 2014

• all store types except predominantly food stores, other stores and petrol stations showed increases in the amount spent year-on-year

• in July 2015, all store types except textiles, clothing and footwear saw falls in average store price compared with June 2014

More information on how average store prices are calculated can be found in the quick guide to retail sales or in the background notes.

Seasonally adjusted internet sales data 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 July 2015 was £827.1 million; this was an increase of 13.0% compared with July 2014

• the amount spent online accounted for 12.6% of all retail spending, excluding automotive fuel, compared with 11.4% in July 2014

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.

Figure 1 shows the longer-term picture for the quantity bought, amount spent and average store price in household goods stores. There has been sustained growth since late 2013 with year-on-year increases in both quantity bought and amount spent during this period. This growth coincides with a fall in average store price, suggesting that consumers have taken advantage of lower prices in store to invest in household goods.

Growth continued in the latest period and in July 2015 compared with July 2014:

• the quantity bought increased by 13.4%

• the amount spent increased by 9.7%

• average store price decreased by 3.2%

Compared with June 2015:

• the quantity bought increased by 3.6%

• the amount spent increased by 2.8%

• average store price decreased by 2.4%

Table 4 shows the main year-on-year contributions to growth within this retail sector.

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

• 41 pence was spent in food stores

• 42 pence in non-food stores

• 7 pence in non-store retailing

• 10 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 2 and 3 show the contribution of each sector to the quantity bought (volume) and amount spent (value) in the retail industry between July 2015 and July 2014.

Table 5 shows how sales varied among different-sized retailers. It shows the distribution of reported change in sales values of businesses (from the RSI sample), ranked by size of business (based on number of employees). Businesses with 10 to 39 employees saw the largest growth in the amount spent in July 2015 compared with July 2014 (10.9%). Businesses with 100 and over employees experienced growth of 1.3%.

More information on the performance of the retail industry by store type and size can be found in the Business Analysis reference table. The table contains information only from businesses that reported in July 2014 and July 2015; it shows reported actual changes in their sales.

Figure 4 shows the percentage change in retail sales volume in a 3 month period with the same period in the previous year. It highlights the strong growth since 2013.

Figure 4 shows 3 distinct periods. Between July 2006 and July 2008 there was continuous growth in retail sales volume, it increased by 2.3% over the period. Growth in inflation (Consumer Prices Index (CPI)) was consistently lower than average weekly earnings over most of this period, meaning real earnings grew, which possibly increased the purchasing power of consumers.

However, between August 2008 and May 2013, the volume of retail sales changed between periods of contraction and expansion, and as a result broadly the same volume of sales were recorded toward the beginning and end of the period. This weakness may be partly explained by the economic climate. Growth in average weekly earnings had been lower than inflation over most of the period, which implies that earnings fell in real terms. However, the value of retail sales continued to grow, increasing by 12.8%, reflecting rising prices between these dates.

From June 2013, growth in volume terms began to increase notably, despite average weekly earnings growing at a slower rate than CPI until September 2014. The volume of retail sales in July 2015 was 7.9% higher than it was in June 2013. In 2013 prices in retail outlets began to fall and this accelerated throughout 2014; this coincided with increased growth in the volume of retail sales. This upturn in spending was accompanied by a decline in the savings ratio, from an average of 8.5% over the period 2008 to 2012, to an average of 6.1% in 2014.

A notable feature of retail sales over the past year has been that prices (as measured by the implied deflator) have been declining. Retail Sales, March 2015 examined the difference between the implied deflator and the Consumer Prices Index (CPI). However, the change in prices has differed between store types. Figure 5 shows the year-on-year growth in the implied deflator for clothes stores, against the range of growth rates in deflators for all other store types, excluding petrol stores.

Figure 5: Month on same month a year earlier growth in implied deflators, in clothing stores and range of other store types (excluding petrol), January 2014 to July 2015

Great Britain

Source: Monthly Business Survey - Retail Sales Inquiry - Office for National Statistics

For all other store types, inflation has been decreasing throughout most of the period, and has been consistently negative since September 2014. However, for clothing stores, this trend has been less noticeable. While inflation in clothing stores has been negative for most periods since mid-2014, there have been periods of positive inflation, including the most recent period of July 2015. The CPI July 2015 release noted that the biggest upward contribution to the CPI 12 month rate came from clothing and footwear. Most years see a decline in prices in this store type between June and July as a result of an increase in summer sales. However, in 2014 the fall was larger than usual, leading to an increase in prices this July relative to the previous year.

The only international estimate of retail sales available for July 2015 was published by the US Census Bureau on 13 August 2015. In its advanced retail sales estimates for July 2015, the amount spent in the US retail industry, including motor vehicles and parts and food services, increased by 0.6% from the previous month and increased by 2.4% compared with July 2014. Total sales for the 3 months to July 2015 were up 2.3% from the same period a year ago.

The latest estimates of the volume of retail trade across the European Union, from Eurostat for June 2015, show a 0.6% decrease in the euro area (EA19) and a 0.5% decrease in the EU28 when compared with May 2015. Compared with June 2014, the retail sales index increased by 1.2% in the EA19 and by 2.0% in the EU28. Note that an accurate comparison cannot be made as Eurostat data are calculated on a 2010 = 100 basis, while data for Great Britain are calculated on a 2011 = 100 basis.