Retail sales, Great Britain: December 2017

• In the latest three months the quantity bought in retail sales increased by 0.4% compared with the previous three months; while the underlying pattern remains one of growth, this is the weakest quarterly growth since the decline of 1.2% in Quarter 1 (Jan to Mar) 2017.

• On the month, the quantity bought decreased by 1.5% when compared with strong sales in November 2017.

• In December 2017, the quantity bought increased by 1.4% when compared with December 2016, with positive contributions from all stores except food stores.

• For the whole of 2017, the quantity bought in retail sales increased by 1.9%; the lowest annual growth since 2013.

• In non-seasonally adjusted terms, shopping for Christmas has shifted in recent years from being mainly in December to more in November as consumers seem to be starting their purchasing earlier in line with Black Friday promotions.

• Internet sales continued to increase when compared with previous years, with physical stores dominating online sales growth in December.

Commenting on today’s official retail figures, Rhian Murphy, ONS Senior Statistician said:

“Retail sales continued to grow in the last three months of the year partly due to Black Friday deals boosting spending.

Consumers continue to move Christmas purchases earlier, with higher spending in November and lower spending in December than seen in previous years. However, the longer-term picture is one of slowing growth, with increased prices squeezing people’s spending.

Over the year the proportion of internet spending is continuing to rise, with almost one in every five pounds spent online by the end of 2017.”

This bulletin presents estimates of the quantity bought (volume) and amount spent (value) in the retail industry for the period 26 November 2017 to 30 December 2017. Estimates for December 2017 excluded “Black Friday” but included “Cyber Monday” (27 November).

Unless otherwise stated, the estimates in this release are seasonally adjusted.

The Retail Sales Index (RSI) measures the value and volume of retail sales in Great Britain on a monthly basis. Data are collected from businesses in the retail industry and the survey’s results are used to produce seasonally adjusted monthly, quarterly and annual estimates of output in the retail industry at current price and at chained volume measures (removing the effect of inflation). Unless otherwise stated all estimates included in this release are based on seasonally adjusted data.

The RSI is an important economic indicator and one of the earliest short-term measures of economic activity. It is used in the compilation of the national accounts and widely used by private and public sector institutions, particularly by the Bank of England and Her Majesty’s Treasury to assist in informed decision and policy-making.

Summary information can be found in the Summary Quality and Methodology Information report.

In December 2017, estimates for the quantity bought (volume) and amount spent (value) in the retail industry increased when compared with both the same month a year earlier and the three months on a year earlier (Table 1). The three-month on three-month movement (Quarter 4 (Oct to Dec) compared with Quarter 3 (July to Sept)) also showed growth; the increase of 0.4% for the quantity bought was the lowest quarterly growth since the decline of 1.2% in Quarter 1 (Jan to Mar) 2017.

The monthly growth rate shows a different picture, with declines of 1.5% in the quantity bought and 0.9% in the amount spent when compared with November 2017. However, care should be taken with the volatility of the month-on-month estimates, as seen in Figure 1; particularly following strong November sales.

Figure 1 shows the rolling three-month on three-month and monthly indices for the quantity bought in the retail industry against the rolling three-month on three-month average store price index.

The underlying three-month on three-month index removes the volatility seen with the monthly path and provides an estimate of the underlying pattern of growth in retail sales.

The three-month on three-month trend shows continued growth in the quantity bought despite a short period of contraction at the start of 2017. While the quantity of goods bought returned to one of growth from April 2017, this has continued at a slower rate than in the earlier periods shown. This coincides with rising store prices following a long period of price declines from July 2014 to November 2016.

Figure 2 shows the annual slowdown to growth in total retail sales.

In 2017, the quantity bought in retail sales increased by 1.9%; the lowest annual growth since 2013.

After experiencing a decline of 0.8% in 2010 and remaining flat in 2011, the quantity bought began to increase steadily up to 2016 when the growth rate reached 4.7%. This growth slowed considerably in 2017.

When compared with December 2016, all main sectors provided a positive contribution to the overall growth of 4.4 percentage points for the amount spent. More money was spent in non-food stores than any other sector, increasing by 1.5 percentage points (Figure 3).

The quantity of goods bought in store increased at a slower rate than the amount spent, at 1.4 percentage points. While petrol stations, non-store retailing and non-food stores provided a positive contribution to growth, food stores decreased by 0.2 percentage points; a likely consequence of continued year-on-year food price increases.

Figure 4 shows that all main retail sectors saw a decrease in the quantity bought, with the largest downwards contribution coming from non-food stores.

Estimates for the amount spent show that all sectors except petrol stations decreased; once again, the largest downwards contribution comes from non-food stores.

However, looking at the monthly picture in isolation makes it difficult to understand what is happening in the retail industry, particularly following Black Friday sales in November encouraging spending to be brought forward from December (Figure 5 in section 7).

Looking at our non-seasonally adjusted growth rates, we can understand when money is spent in preparation for Christmas (Figure 5).

Figure 5 shows the non-seasonally adjusted growth rates for November and December for years 2012 to 2017.

In 2012 and 2013, growths into December reached 16.6% and 17.6% respectively as consumers waited to buy the majority of their Christmas goods in December.

In 2014, while the majority of purchasing remained in December, the growth rate slowed to 13.6% as consumers began to purchase more goods in November, possibly to take advantage of Black Friday deals.

In 2015, 2016 and 2017, spending has evened out over the two months and we no longer see the increases to growth into the December months. In December 2017, non-seasonally adjusted sales for the quantity bought slowed to 11.2% following strong growth in November. This has resulted in the decline of 1.5% in the monthly seasonally adjusted growth rate. Non-store retailing contributes to this pattern in spending (Figure 6).

As shown in Figure 6, we have seen a consistent slowdown in the monthly growth into December for non-store retailing, while the purchasing of goods in November continues to rise.

Non-store retailing accounts for retailers trading online that do not have a physical store presence. Therefore, non-store does not include money spent online in well-known stores on the high street, for example. Therefore, a look at online spending for all retail sectors provides us with a full picture of what is happening in online retail sales (Table 2 in section 8).

Internet sales continued to increase as a proportion of all non-seasonally adjusted retailing in December 2017; now accounting for 18% of all retail – an increase on the December 2016 figure of 17.1%.

The year-on-year increase of 9.4% in total online retailing continues the pattern of growth but at a slower pace than previous months. The main contributor to this slowdown is in non-store retailing, which has slowed to 3.7% in December 2017 having experienced a boom in sales over the last two years. Whilst non-store retailing may be experiencing a slowdown in growth it is still by far the largest contributor to the proportion of spending online, accounting for 79.4% of all money spent in internet sales.

Stores with a physical presence continue to increase their online spending, with strong year-on-year growths across all sectors. Textile, clothing and footwear stores, in particular, increased sales by 20.9%, followed closely by household goods stores with a growth of 17%. Online sales from stores with a physical presence are the largest contributor to the overall growth in December 2017 (Figure 7).

Contributions to growth in December 2017 for internet sales show that physical stores (including high street and supermarkets) provided the largest positive contribution to overall growth at 7.5 percentage points. This changes the picture from previous months where non-store retailing has dominated spending online due to a boom in online purchasing in combination with its large weight to total online sales.

In December 2017, however, non-store spending has slowed down, while stores with a physical presence has continued to increase.

The only international estimate of retail sales available for December 2017 was published by the US Census Bureau on 12 January 2018. In its advanced monthly sales for retail and food services, December 2017 they include the amount spent in the US retail industry, including motor vehicles and parts and food services.

Eurostat also published their latest estimates of the volume of retail trade across the European Union on 8 January 2018 for November 2017. This shows the seasonally adjusted volume of retail trade in both the euro area (EA19) and EU28 when compared with October 2017.

Data for Northern Ireland are published by the Northern Ireland Statistics and Research Agency (NISRA).

It should be noted that accurate comparisons cannot be made against these or other international statistics due to a variety of reasons, including, differences in methodology.

Our Monthly Business Survey (MBS) for retail sales measures output from the retail industry in Great Britain. It samples 5,000 businesses, with all businesses employing over 100 people or with an annual turnover of more than £60 million receiving an online questionnaire every month.

Further qualitative data or information and summary tables can be found in the attached datasets. This includes data on:

• response rates
• standard errors
• revision triangle
• distribution analysis

The Retail sales Quality and Methodology Information report contains important information on:

• the strengths and limitations of the data and how it compares with related data
• uses and users of the data
• how the output was created
• the quality of the output including the accuracy of the data