Retail sales, Great Britain: August 2015

• Continuing a sustained period of year-on-year growth, the volume of retail sales in August 2015 is estimated to have increased by 3.7% compared with August 2014. This was the 29th consecutive month of year-on-year 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 30th consecutive month, increasing by 0.4%
• Compared with July 2015, the quantity bought in the retail industry is estimated to have increased by 0.2%
• Average store prices (including petrol stations) fell by 3.3% in August 2015 compared with August 2014; the 14th consecutive month of year-on-year price falls
• The amount spent in the retail industry increased by 0.2% in August 2015 compared with August 2014, but decreased by 0.3% compared with July 2015
• The value of online sales increased by 7.4% in August 2015 compared with August 2014, but decreased by 2.7% compared with July 2015
• Revisions in this release were caused by the incorporation of late data. The earliest revisions point for current price, non-seasonally adjusted data was August 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 2 August 2015 to 29 August 2015, thus the August Bank Holiday is not included within this release. Unless otherwise stated, the estimates in this release are seasonally adjusted.

The estimates in this release are 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. It is estimated that this survey covers approximately 95% of all known retail turnover in Great Britain.

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 August 2015 was 59.8% of questionnaires, accounting for 92.5% 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 and in the quality tables 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 August 2015, the quantity bought in the retail industry (volume):

• increased by 3.7% compared with August 2014

• increased by 0.2% compared with July 2015

The amount spent (value):

• increased by 0.2% compared with August 2014

• decreased by 0.3% compared with 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 3.3%.

More information on how the implied price deflator and other estimates in this release are calculated can be found in section 3 of the background notes.

Amount spent in the retail industry

In the 4 week reporting period during August 2015, the amount spent in the retail industry was £27.4 billion (non-seasonally adjusted).

This compares with:

• £28.5 billion in the 4 week reporting period for July 2015

• £27.5 billion in the 4 week reporting period for August 2014

This equates to an average weekly spend of:

• £6.9 billion in August 2015, compared with

• £7.1 billion in July 2015

• £6.9 billion in August 2014

You should note that the August Bank Holiday in 2015 is not included in this standard trading period but was included in the August 2014 figures.

Main points:

• in August 2015, all store types showed increases in the quantity bought compared with August 2014

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

• in August 2015, all store types saw falls in average store price compared with August 2014 the largest decrease was once again reported by petrol stations, which fell by 12.3%, the 24th month of consecutive year-on-year falling prices in this store type and the longest run of consecutive year-on-year falls since consistent records began in 1996

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 August 2015 was £800.0 million; this was an increase of 7.4% compared with August 2014, the lowest increase in this measure since November 2012

• the amount spent online accounted for 12.2% of all retail spending, excluding automotive fuel, compared with 11.5% in August 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 of the amount spent in both large and small businesses, all retailing, excluding fuel. The pattern of spending in both large and small businesses is fairly consistent. Looking at a year-on-year comparison of these data we are able to see that both small and large businesses increased by 0.9% in August 2015 compared with August 2014.

Table 4 shows the year-on-year growth in large and small businesses for each store type. In August 2015 all store types except predominantly food stores and other stores reported growth in small businesses. Within large businesses we saw falls in predominantly food stores, textile, clothing and footwear and household goods stores, however, small businesses within textile, clothing and footwear and household goods stores saw growth of 15.0% and 8.9% respectively compared with August 2014.

Feedback suggests that the increase in the amount spent in small textile, clothing and footwear businesses was a result of increased sales of school uniform.

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 August 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 August 2015 and August 2014.

In August 2015, all 4 main retail sectors saw an increase in the quantity bought (volume). The largest contribution came from the non-food stores sector.

In August 2015, 2 out of the 4 main sectors (non-store retailing and non-food stores) contributed to the increase in amount spent (value). The largest contribution came from the non-store retailing sector.

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 August 2015 compared with August 2014 (9.3%). Businesses with 100 and over employees showed no growth.

Figure 4 compares a rolling 3 month period with the same period in the previous year and highlights that retail sales started to grow strongly from mid 2013. However, over the last 5 months the rate of growth is shown to have slowed consistently.

Three distinct periods emerge from Figure 4. Between August 2006 and July 2008, retail sales volumes were experiencing continuous growth, although to a different degree, with the volume of sales increasing by 2.4% over the period as a whole. Growth in inflation (Consumer Prices Index (CPI)) was lower than average weekly earnings over most of this period; this resulted in rising real earnings, an indicator of the purchasing power of consumers.

However, between August 2008 and May 2013, the volume of retail sales fluctuated 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 during this time. Growth in average weekly earnings was 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% over the period, reflecting rising prices between these dates.

The third period shown in Figure 4 started in June 2013, when growth in volume terms began to increase notably, despite average weekly earnings growing mostly at a slower rate than CPI until September 2014. In 2013 prices in retail outlets began to fall and this accelerated throughout 2014 and coincided with increased growth in the volume of 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 % over the period 2013 to 2014.

A notable feature of the retail industry has been the recent decline in prices (as measured by the retail sales implied deflator(see background note 3)). The 12 month growth rate in the implied deflator has been negative since July 2014.

Figure 5 shows that the fall in the prices of all retail sales has been reflected in the 4 main retail sectors to a different extent. The biggest fall in prices was observed in “predominantly automotive fuel stores”, coinciding with the recent fall in oil prices and subsequently petrol prices. In contrast, “predominantly non-food stores” showed the smallest decrease in prices.

Figure 6 shows that the fall in prices for the 4 main retail sectors coincided with increases in the volume of sales in these 4 sectors. Although “predominantly automotive fuel stores” have seen the biggest fall in prices, the increase in the volume of sales for this retail grouping has been relatively small (7.3% since January 2013). However, “non-store retailing”, which are those companies that sell predominantly online or through mail order, saw the fastest increase in sales’ volumes (40% since January 2013) despite the fall in the prices of this sector being less pronounced, showing the growth in Internet-only retailing.

The only international estimate of retail sales available for August 2015 was published by the US Census Bureau on 15 September 2015. In its advanced retail sales estimates for September 2015, the amount spent in the US retail industry, including motor vehicles and parts and food services, increased by 0.2% from the previous month and increased by 2.2% compared with August 2014. Total sales for the 3 months to August 2015 were up 2.2% from the same period a year ago.

The latest estimates of the volume of retail trade across the European Union, from Eurostat for July 2015, show a 0.4% increase in the euro area (EA19) and a 0.3% increase in the EU28 when compared with June 2015. Compared with July 2014, the retail sales index increased by 2.7% in the EA19 and by 3.3% 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.