An article in The Independent quoted a spokesman from an accountancy firm who misunderstood how ONS treats defunct businesses in its retail sales estimates. Joe Grice wrote to set the matter straight.
You quote Richard Hyman of Deloitte accountants who misunderstands the way in which Office for National Statistics retail sales estimates are produced and, in particular, our treatment of defunct businesses or those in administration ("Retail sales plummet in January", Saturday 20 February).
ONS uses actual returns of turnover from around 5,000 businesses covering approximately 95 per cent of the retail sector in Great Britain. Every month around 900 large businesses are completely enumerated and around 4,100 businesses which employ up to 99 people are sampled.
The treatment of businesses in administration is addressed through regular updating and profiling of businesses through a central business register and is as up-to-date as possible. If a business does die and that activity is picked up by other businesses, the total retail activity is still captured so there is no boosting of sales at an aggregate level. This is why it is important to have a large broadly-based and comprehensive representation across the whole of the retail sector, as do the ONS estimates.
The issue in your article regarding defunct retailers would impact on estimation methods which use like-for-like panel-type comparisons, but these are not used by ONS for the retail estimates.
Office for National Statistics
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