Retail sales, Great Britain: March 2016

Continuing a sustained period of year-on-year growth, the volume of retail sales in March 2016 is estimated to have increased by 2.7% compared with March 2015. This was the 35th 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 28th consecutive month, increasing by 0.8%.

Compared with February 2016, the quantity bought in the retail industry is estimated to have decreased by 1.3%.

Average store prices (including petrol stations) fell by 3.0% in March 2016 compared with March 2015, the 21st consecutive month of year-on-year price falls.

The amount spent in the retail industry decreased by 0.1% compared with March 2015 and decreased by 1.3% compared with February 2016.

The value of online sales increased by 8.9% in March 2016 compared with March 2015 and decreased by 0.5% compared with February 2016.

Revisions to this release were caused by the incorporation of late data. The earliest revisions point for current price, non-seasonally adjusted data was March 2015. 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 28 February 2016 to 2 April 2016. Unless otherwise stated, the estimates in this release are seasonally adjusted. Estimates for March 2016 include Easter, whereas Easter 2015 fell in the April 2015 reporting period.

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 March 2016 was 61.8% of questionnaires, accounting for 80.5% 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 datasets 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 March 2016:

the quantity bought in the retail industry (volume):

• increased by 2.7% compared with March 2015
• decreased by 1.3% compared with February 2016

the amount spent (value):

• decreased by 0.1% compared with March 2015
• decreased by 1.3% compared with February 2016

Amount spent in the retail industry

In the 5 week reporting period during March 2016, the amount spent in the retail industry was £34.2 billion (non-seasonally adjusted).

This compares with:

• £26.7 billion in the 4 week reporting period for February 2016
• £34.4 billion in the 5 week reporting period for March 2015

This equates to an average weekly spend of:

• £6.8 billion in March 2016
• £6.7 billion in February 2016 and
• £6.9 billion in March 2015 

Main points

In March 2016:

• all store types, except textile, clothing and footwear stores showed increases in the quantity bought compared with March 2015

• there were decreases in food stores, non-food stores, textile, clothing and footwear stores and fuel stores in the amount spent compared with March 2015

• all store types, except textile, clothing and footwear stores saw falls in average store price compared with 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 3.0%.

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.

The underlying growth in the rolling 3 month on previous 3 months movement in the quantity bought has shown sustained growth for 28 consecutive months, increasing by 0.8% in March 2016. This was the longest period of sustained 3 month on 3 month growth since records began in June 1996. The 3 month on 3 month movement in the amount spent has seen periods of contraction and growth.

Figure 1 shows that the quantity bought remained fairly constant until late 2013, but began to increase steadily as average prices in store started to fall. The amount spent increased steadily during the period, however, as prices in store decreased the amount spent remained steady, implying that as prices fell, consumers bought more goods.

Figure 2 looks at the rolling 3 month on 3 month volume growth in each of the 4 main retail sectors. The largest increase came from non-store retailing, however, due to the fact that this has a much smaller weight (7.6%) than the other store types, the main contributor to growth comes from predominantly non-food stores which has a weight of 42.6%.

The quantity bought in both food and non-food stores has increased steadily since mid-2013, this growth has been fairly constant and shows a similar trend to all retailing. The quantity bought in petrol stations shows a different pattern to that of all retailing and is seemingly more reactive to a change in prices so as prices fell there was a sharp increase in the quantity bought.

Figure 3 shows the amount spent by each main store type and similar to the quantity bought non-store retailing shows the largest increase, however, once again the main contribution to the increase came from predominantly non-food stores.

The amount spent in food and non-food stores has remained fairly static in recent periods suggesting that falling prices do not have a significant impact. However, the amount spent in petrol stations fell significantly as consumers took advantage of falling prices.

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 March 2016 was £859.6 million; this was an increase of 8.9% compared with March 2015

• the amount spent online accounted for 13.2% of all retail spending, excluding automotive fuel, compared with 12.1% in March 2015

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.

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)

Figure 4 shows that for every pound spent in the retail industry:

• 40 pence was spent in food stores
• 43 pence in non-food stores
• 8 pence in non-store retailing
• 9 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.

In March 2016 compared with March 2015, all 4 main retail sectors saw an increase in the quantity bought (volume) while 2 of the 4 main sectors (food stores and non-food stores) saw a decrease in the amount spent (value). The largest contribution in the quantity bought came from petrol stations while the largest downwards contribution in amount spent came from food stores.

In March 2016 compared with February 2016, 2 of the 4 main retail sectors (food stores, non-food stores) saw a decrease in both the quantity bought (volume) and amount spent (value). The largest contribution for both quantity bought and amount spent came from food stores.

Table 4 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 March 2016 compared with March 2015 (3.4%). Businesses with 100 and over employees showed a decrease of 1.3%.

More information on the performance of the retail industry by store type and size can be found in the Business Analysis dataset.

Figure 7 compares a rolling 3 month period with the same period in the previous year and highlights that the volume of retail sales started to grow strongly from mid-2013. The latest data show a slight rise in retail sales growth to 3.7% in the 3 months to March 2016, when compared with growth of 3.5% in the 3 months to February 2016. The rolling 3 month on 3 month a year ago growth in retail sales has averaged 3.7% since the start of 2016 which was lower than the 2015 average of 4.7%.

Three distinct periods emerge from Figure 7. Between March 2007 and July 2008, retail sales volumes were experiencing continuous growth, although to a different degree. 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 March 2007 and July 2008, consumer credit 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, which may be partly explained by the economic climate over this period, and coincided with a reduction in consumer credit of 24.8%. 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 7 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 15.4% between June 2013 and February 2016. Between June 2013 and March 2016, the price level (shown by the implied deflator) fell by 5.3%, coinciding with 9.5% 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 5.3% over the period 2013 to 2015.

Last month’s economic context showed that the rise in the volume of retail sales between 1997 and 2015 coincided with growth in employee jobs. However, this relationship does not hold for self-employed jobs where the 55.5% growth in retail sales between 1997 and 2015 has resulted in 25.1% fall in jobs over the same period. The fall in this industry has been caused by reductions in self-employed jobs worked by both men and women as shown in Figure 8.

For both sexes, the fall in self-employed jobs was due to a reduction in the number of full-time jobs (by 44.9% and 24.4% for males and females, respectively). Both sexes also saw increases in the number of part-time jobs (by 41.0% and 1.4% for males and females, respectively).

The only international estimate of retail sales available for March 2016 was published by the US Census Bureau on 13 April 2016. In its advanced retail sales estimates for March 2016, the amount spent in the US retail industry, including motor vehicles and parts and food services, decreased by 0.3% compared with the previous month and increased by 1.7% compared with March 2015. Total sales for the 3 months to March 2016 were up 2.8% from the same period a year ago.

The latest estimates of the volume of retail trade across the European Union, from Eurostat for February 2016, show the seasonally adjusted volume of retail trade increased by 0.2% in the euro area (EA19) and fell by 0.1% in the EU28 when compared with January 2016. Compared with February 2015, the retail sales index increased by 2.4% in the EA19 and by 3.0% 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 2012 = 100 basis.