Retail sales, Great Britain: May 2016

The volume of retail sales in May 2016 is estimated to have increased by 6.0% compared with May 2015.

The underlying pattern in the data, as suggested by the 3 month on 3 month movement in the quantity bought, increased by 1.5%.

Compared with April 2016, the quantity bought in the retail industry is estimated to have increased by 0.9%.

Average store prices (including petrol stations) fell by 2.8% in May 2016 compared with May 2015.

The amount spent in the retail industry increased by 3.1% compared with May 2015 and increased by 1.3% compared with April 2016.

The value of online sales increased by 21.5% in May 2016 compared with May 2015 and increased by 6.4% compared with April 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 May 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 1 May 2016 to 28 May 2016. 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 trading period, 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. Current price non-seasonally adjusted data 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 May 2016 was 60.6% of questionnaires, accounting for 91.3% 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 May 2016:

the quantity bought in the retail industry (volume):

• increased by 6.0% compared with May 2015; this was the 37th consecutive period of year-on-year growth
• increased by 0.9% compared with April 2016

the amount spent (value):

• increased by 3.1% compared with May 2015
• increased by 1.3% compared with April 2016

Amount spent in the retail industry

In the 4 week reporting period during May 2016, the amount spent in the retail industry was £29.2 billion (non-seasonally adjusted).

This compares with:

• £28.3 billion in the 4 week reporting period for April 2016
• £28.3 billion in the 4 week reporting period for May 2015

This equates to an average weekly spend of:

• £7.3 billion in May 2016
• £7.1 billion in April 2016 and
• £7.1 billion in May 2015

Main points

In May 2016:

• all store types showed increases in the quantity bought compared with May 2015
• textile, clothing and footwear stores was the only store type where less was spent than in May 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 2.8%; this was the 23rd consecutive month of year-on-year price falls
• all store types saw falls in average store price compared with May 2015; the largest fall was shown in petrol stations

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.

In predominantly food stores in May 2016 compared with May 2015:

• the quantity bought increased by 4.2%
• the amount spent increased by 1.6%
• average store price decreased by 2.5%

Compared with April 2016:

• the quantity bought increased by 1.1%
• the amount spent increased by 1.6%
• average store price decreased by 0.2%

Figure 1 shows the quantity bought, amount spent and average store price in predominantly food stores. The amount spent remained fairly flat between January 2010 and late 2015, however, since then the amount spent has increased gradually to the highest level on record in May 2016 and is now 14.6% higher than it was in January 2010.

The quantity bought in food stores increased at a consistent rate in the early part of the time series and since mid-2013 has stayed around a similar level showing more volatility than previously. This pattern changed again in mid-2015 and in May 2016, there was an increase in both year-on-year and month-on-month growth, with year-on-year growth increasing for 13th consecutive month.

Average prices in food stores increased steadily in the early part of the time series, however, there have been year-on-year decreases in average store price in food stores for 22 consecutive months. Prices on food and non-alcoholic beverages continue to be one of the largest downward pulls on inflation, with the Consumer Price Index (CPI) for food showing a decrease of 0.4% in May 2016 compared with the previous month and a decrease of 0.1% compared with May 2015.

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 May 2016 was £963.8 million; this was an increase of 21.5% compared with May 2015
• the amount spent online accounted for 14.3% of all retail spending, excluding automotive fuel, compared with 12.1% in May 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 2 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 May 2016 compared with May 2015, all 4 main retail sectors saw an increase in the quantity bought (volume) and amount spent (value). The largest contribution in the quantity bought came from non-store retailing and non-food stores while the largest contribution in amount spent came from non-food stores.

In May 2016 compared with April 2016, 3 of the 4 main retail sectors (food stores, non-food stores and non-store retailing) saw an increase in 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 40 to 99 employees saw the largest growth in the amount spent in May 2016 compared with May 2015 (36.2%). Businesses with 100 and over employees showed an increase of 3.0%.

Figure 5 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 an increase in the retail sales growth, from 4.3% in the 3 months to April 2016 to 4.8% in the 3 months to May 2016. The rolling 3 month on 3 month a year ago growth in retail sales has averaged 4.2% since the start of 2016 which is lower than the 2015 average of 4.6%.

Three distinct periods emerge from Figure 5. Between May 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 May 2007 and July 2008, consumer credit increased by 8.7%, 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 5 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 17.1% between June 2013 and April 2016. Between June 2013 and May 2016, the price level (shown by the implied deflator) fell by 5.6%, coinciding with 14.1% 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.

Figure 6 shows the ratio of retail vacancies per 100 employee jobs. While the ratio of retail vacancies has been very volatile, it saw a sharp decline between 2008 and 2009. This coincides with the poor economic climate during the downturn. From mid-2009 the ratio of retail vacancies picked up slightly but remained fragile, picking up pace steadily from 2013 onwards.

The slight increase in retail sales is supported by the external indicators. According to the Confederation of British Industry’s May 2016 Distributive Trades Survey, retail sales volumes grew slightly but sales were a little below average for the time of the year. The biggest driver of growth in volume terms was from the clothing sector. Similarly, according to the British Retail Consortium UK retail sales saw a growth of 1.4% in May 2016 compared with May 2015, with clothing making a comeback. According to the Bank of England’s Agents’ summary of business conditions report, the 3 month on the same period a year earlier retail sales growth for May 2016 remained positive but was slightly down compared with last year.

The only international estimate of retail sales available for May 2016 was published by the US Census Bureau on 14 June 2016. In its advanced retail sales estimates for May 2016, the amount spent in the US retail industry, including motor vehicles and parts and food services, increased by 0.5% compared with the previous month and increased by 2.5% compared with May 2015. Total sales for the 3 months to May 2016 were up 2.4% from the same period a year ago.

The latest estimates of the volume of retail trade across the European Union, published by Eurostat on 3 June 2016 for April 2016, show the seasonally adjusted volume of retail trade remained stable in the euro area (EA19) and increased by 0.5% in the EU28 when compared with March 2016. Compared with April 2015, the retail sales index increased by 1.4% in the EA19 and by 2.4% 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.