Retail sales, Great Britain: December 2015

• Year-on-year estimates of the quantity bought in the retail industry showed growth for the 32nd consecutive month in December 2015, increasing by 2.6% compared with December 2014

• The underlying pattern in the data, as suggested by the 3 month on 3 month movement in the quantity bought, showed growth for the 24th consecutive month, increasing by 1.1%

• Compared with November 2015, the quantity bought in the retail industry is estimated to have decreased by 1.0%

• When comparing the 2015 annual data with 2014, the quantity bought in the retail industry was estimated to have increased by 4.5%

• Average store prices (including petrol stations) fell by 3.2% in December 2015 compared with December 2014, the 18th consecutive month of year-on-year price falls

• The amount spent in the retail industry decreased by 1.0% in December 2015 compared with December 2014 and decreased by 1.4% compared with November 2015

• The value of online sales increased by 8.2% in December 2015 compared with December 2014 and decreased by 5.2% compared with November 2015

• Revisions to this release were caused by the incorporation of late data. The earliest revisions point for current price, non-seasonally adjusted data was December 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 29 November 2015 to 2 January 2016. Unless otherwise stated, the estimates in this release are seasonally adjusted. Estimates for December 2015 did not include “Black Friday”, however, “Cyber Monday” was included this reporting period. These events occurred in the corresponding reporting periods in 2014.

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 December 2015 was 66.4% of questionnaires, accounting for 83.7% 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 (169 Kb 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 December 2015:

the quantity bought in the retail industry (volume):

• increased by 2.6% compared with December 2014

• decreased by 1.0% compared with November 2015

the amount spent (value):

• decreased by 1.0% compared with December 2014

• decreased by 1.4% compared with November 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 3.2%.

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 5 week reporting period during December 2015, the amount spent in the retail industry was £44.8 billion (non-seasonally adjusted).

This compares with:

• £32.1 billion in the 4 week reporting period for November 2015

• £45.1 billion in the 5 week reporting period for December 2014

This equates to an average weekly spend of:

• £9.0 billion in December 2015, compared with

• £8.0 billion in November 2015

• £9.0 billion in December 2014

Main points:

In December 2015:

• all main store types, except predominantly non-food stores showed increases in the quantity bought compared with December 2014

• all main store types except predominantly food stores and non-store retailing showed decreases in the amount spent year-on-year

• all store types saw falls in average store price compared with December 2014

There were several store types where the effect of “Black Friday” and “Cyber Monday” had an impact on sales in both November and December 2015, in particular, department stores (non-specialised stores).

Tables 3 and 4 provide a summary of the growth rates of the quantity bought and amount spent in department stores in November and December for the past 2 years.

In November 2014, there was strong growth in the quantity bought and amount spent in department stores compared with November 2013, while December 2014 saw weaker growth compared with December 2013. This was as a result of “Black Friday” deals in the November 2014 reporting period. The month-on-month picture was similar with growth in November 2014 compared with October 2014 while December 2014 reported falls as consumers had already made significant purchases in November 2014 taking advantage of “Black Friday” offers.

We have seen a slightly different spending pattern in department stores in 2015 where higher year-on-year growth has been reported in December 2015 compared with December 2014. This suggests that the pattern of spending has changed between 2014 and 2015 as department stores moved from a one-day “Black Friday” event to week-long events including “Cyber Monday” and therefore spending was more spread out over the 2 months.

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 2012=100.

Main points:

• average weekly spending online in December 2015 was £837.2 million; this was an increase of 8.2% compared with December 2014

• the amount spent online in December 2015 in non-store retailing increased by 3.6% compared with December 2014; this is the lowest since November 2012 (1.6%)

• the amount spent online accounted for 12.8% of all retail spending, excluding automotive fuel, compared with 11.8% in December 2014

Table 5 shows the year-on-year growth rates for total Internet sales by sector and the proportion of sales made online in each 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 December 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 1 and 2 show the contribution of each sector to the quantity bought (volume) and amount spent (value) in the retail industry between December 2015 and December 2014.

In December 2015, 3 out of the 4 main retail sectors saw an increase in the quantity bought (volume). The largest contribution came from the food stores sector.

In December 2015, 2 out of the 4 main sectors (non-food stores and petrol stations) contributed to the decrease in amount spent (value). The largest downward contribution came from the non-food stores sector.

Table 6 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 40 to 99 employees saw the largest growth in the amount spent in December 2015 compared with December 2014 (23.7%). Businesses with 100 and over employees showed a decrease of 0.1%.

More information on the performance of the retail industry by store type and size can be found in the Business Analysis reference table (26.5 Kb Excel sheet).

Figure 3 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. Throughout most of 2015, the retail sales growth rate has fluctuated around the 4.0% to 5.0% range, which is higher than just before the downturn. However, the latest data shows an easing in retail sales growth to 3.7% in the 3 months to December 2015, the lowest rate for 2015, when compared with growth of 5.1% in the 3 months to November 2015.

Three distinct periods emerge from Figure 3. Between December 2006 and July 2008, retail sales volumes were experiencing continuous growth, although to a different degree, with the volume of sales increasing by 0.9% over the period as a whole. Growth in inflation (Consumer Prices Index CPI) was lower than average weekly earnings over most of this period; which resulted in rising real earnings, an indicator of the purchasing power of consumers. Moreover, between December 2006 and July 2008 consumer credit¹ increased by 8.8% which may have been a factor driving retail sales growth.

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 towards the beginning and end of the period. This weakness may be partly explained by the economic climate over this period which coincided with a reduction in consumer credit of 24.8% between August 2008 and May 2013. Moreover, growth in average weekly earnings was lower than inflation over most of the period, which implies that earnings fell in real terms.

The third period shown in Figure 3 started in June 2013, when growth in volume terms began to increase notably, despite average weekly earnings growing at a slower rate than CPI until September 2014. Moreover, since June 2013, consumer credit has followed a broadly upward trend, growing by 13.8% between June 2013 and November 2015. In mid-2013, prices in retail outlets began to fall and this accelerated throughout most of 2014 and 2015, coinciding with higher 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 9.0% over the period 2008 to 2012, to an average of 5.9% over the period 2013 to 2014.

Figure 4 shows that growth in the volume of all retail sales excluding fuel in the year to December 2015 (dark blue bars) was lower than compound average month on year growth prior to the downturn (light blue bars), however, this masked a wide variation in the relative performances of the different store types. In December 2015, growth in the volume of retail sales in predominantly food stores, household goods stores, non-specialised stores (department stores) and non-store retailing was significantly higher than prior to the downturn (by 0.8, 1.4, 7.4 and 9.2 percentage points, respectively). However, growth in the volume of retail sales in other non-food stores and textile, clothing and footwear stores was significantly lower than pre-downturn growth rates (by 11.1 and 10.1 percentage points, respectively). This may suggest that there has been a change in consumer spending patterns in December 2015 compared with prior to the downturn, with spending mainly being reallocated from textile, clothing and footwear stores and other non-food stores towards department stores and non-store retailing.

Notes for economic context

1. Consumer credit stands for monthly amounts outstanding of total (excluding the Students Loans Company) sterling net unsecured lending to individuals (Table A5.2).

The only international estimate of retail sales available for December 2015 was published by the US Census Bureau on 15 January 2016. In its advanced retail sales estimates for December 2015, the amount spent in the US retail industry, including motor vehicles and parts and food services, decreased by 0.1% from the previous month and increased by 2.2% compared with November 2014. Total sales for the 3 months to November 2015 were up 1.8% from the same period a year ago.

The latest estimates of the volume of retail trade across the European Union, from Eurostat for November 2015, show the seasonally adjusted volume of retail trade decreased by 0.3% in the euro area (EA19) and increased by 0.2% in the EU28 when compared with October 2015. Compared with November 2014, the retail sales index increased by 1.4% in the EA19 and by 2.6% 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 2012 = 100 basis.