Statistical bulletin: Retail Sales, December 2012

Key Points

• In December 2012, year-on-year estimates of retail sales volumes continued to show upward movements seen in the retail sector since August 2011 but the strength of this movement was weaker than in previous months.
• Compared with December 2011, the quantity of goods bought (all retailing seasonally adjusted sales volumes) in December 2012 was estimated to have increased by 0.3%. Between the same periods the amount spent (all retailing seasonally adjusted sales values) was estimated to have increased by 0.7%.
• With the exception of December 2010, when retail sales fell sharply as a result of harsh winter weather, the 0.3% year-on-year increase in the quantity bought was the lowest year-on-year growth for the month of December since 1998 (-0.4%).
• Looking at the monthly picture (December 2012 compared with November 2012) both the quantity bought and the amount spent fell by 0.1%.
• This December, the proportion of sales made online fell at a slower rate between November and December than seen in previous years and were 1.2% higher compared with December 2011.
• The estimated weekly spend across all retailing was £8.5 billion in December 2012 compared with £8.4 billion in December 2011.
• The December period covers the dates 25 November 2012 to 29 December 2012.
• Users are reminded that all figures contained within this release are estimates.

Key Figures

Table 1, All Retailing, December 2012 (seasonally adjusted percentage change)

The ONS Retail Sales Index (RSI) is calculated from a sample of 5,000 retailers representing approximately 90% of all known retail activity within Great Britain. The sample contains the 900 largest retailers, i.e. businesses employing more than 100 employees or with annual turnover greater than £60 million, and a random sample of smaller retailers. Retailers in the sample are asked to provide their total retail sales turnover and total turnover for sales made via the Internet for the specified period. The RSI is used to inform decisions on the current economic performance of the retail sector and is a data source for Gross Domestic Product.

At a Glance

In December 2012 the quantity of goods bought in the retail sector (volume) increased by 0.3% compared with December 2011. The amount spent (value) increased by 0.7% over the same period.  Since December 2012 the prices of goods sold in the retail sector (as measured by the implied price deflator) increased by 0.6%.

Long Term Picture

To enable a comparison of change, Figure 1 shows the quantity of goods bought in the retail sector (all retailing sales volumes) as indices referenced to 2009. From September 2011, the quantity of goods bought in the retail sector showed slight increases in the year-on-year movements, but the year-on-year growth of 0.3% in December 2012 indicates that growth in year-on-year movements slowed.

 

Figure 1, All Retailing (seasonally adjusted) sales volumes

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Looking now at the year-on-year growth rates for past months of December, as shown in Figure 2, with the exception of December 2010 where the amount bought in the retail sector was affected by the harsh winter weather, the growth of 0.3% in December 2012 was the lowest year-on-year growth in a December since December 1998 when the quantity bought fell by 0.4%.

Figure 2, Year-on-year growth in December periods

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 Internet Sales

Although total retail sales were relatively flat, compared with December 2011 more shopping was carried out online in December 2012. In December 2012, Internet sales were 10.6% of all retail sales, a fall of 0.1% from November 2012 but an increase of 1.2% compared with December 2011.

The proportion of sales made online this December did not follow the normal pattern of growth between November and December (see Figure 3). Internet sales usually fall at a much faster rate between these two months than seen this year. Feedback provided by retailers this month suggests that sales made via the internet helped to boost overall sales and provided a much greater proportion of sales in December than they were expecting. 

 

Figure 3, Internet sales as a proportion of all retailing, non-seasonally adjusted

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Contributions to Growth

The retail industry is divided into four retail sectors; predominantly food stores, predominantly non-food stores, non-store retailing and stores selling automotive fuel. In December 2012 for every pound spent in the retail sector 41 pence was spent in food stores, 42 pence in non-food stores, 5 pence in non-store retailing and 12 pence was spent on 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.

Figure 4, Contributions to year-on-year volume growth from the four main retail sectors

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Figure 4 shows that non-store retailing and non-food stores provided the growth in the quantity bought in retail sales but that much of this growth was cancelled out by the year-on-year falls in the quantity bought at petrol stations and food stores.

Looking now at the year-on-year growth for the amount spent as shown in Figure 5, we see that food stores contributed the most towards the year-on-year growth in the amount spent in all retailing and petrol stations provided the downward pressure.

Figure 5, Contributions to year-on-year value growth from the four main retail sectors

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Table 2 provides estimates of the year-on-year growth in the quantity bought amount spent for each sector and the sub-sectors of non-food stores.

Table 2, Seasonally Adjusted Year-on-Year Growth Rates and Contribution to all Retailing by Sector

Amount spent in retail

In the December 2012 five week reporting period the amount spent in the retail sector was £43 billion (non-seasonally adjusted). This compares with £29 billion in the November 2012 four week reporting period and £42 billion in the December 2011 five week reporting period.

This equates to an average weekly spend of £8.5 billion in December 2012, £7.3 billion in November 2012 and £8.4 billion in December 2011.

Internet Sales

Key points

• The average weekly spend online (Internet sales values non-seasonally adjusted) in December 2012 was estimated at £830.3 million, an increase of 15.5% compared with December 2011.

• The amount spent online accounted for 10.6% of all retail spending excluding automotive fuel.

• As expected, more was spent online in the non-store retailing sector than any other sector. Spending online now accounts for 72.0% of total spending in this sector up from 68.0% in December 2011. In the food sector 3.2% of spending was online, down from 3.3% a year earlier. This sector has the lowest proportion of online spend in relation to all spending.

Internet sales in detail

Internet sales measure how much was spent online through retailers in Great Britain. Figures are non-seasonally adjusted and the reference year is 2010=100. Table 3 shows the year-on-year growth rates for total Internet sales, by sector and the contribution that each sector makes to total Internet sales.

Table 3, Summary of Internet Sales Performance for December 2012

Sector Summary

Predominantly food stores in December 2012 saw an increase in the amount spent (1.7%). compared with December 2011. The prices of goods sold in this sector increased by 3.0% and the quantity bought decreased by 1.0% over the same period. 

This sector covers supermarkets, specialist food stores such as butchers, bakers and fishmongers, off licenses and tobacconists. The quantity bought at supermarkets was unchanged from December 2011 but sales at specialist food stores, off licenses and tobacconists fell. 

In December 2012 average weekly sales in this sector were £3.3 billion; 3.2% of sales, £103.6 million, were made via the Internet. 

Predominantly non-food stores in December 2012, saw an increase in the quantity of goods bought (1.6%) and in the amount spent (0.6%) when compared with December 2011. The prices of goods sold decreased by 0.5% in the year to December 2012.

In December 2012 average weekly sales were £3.9 billion, which was more than any other sector. In this sector 8.4% of sales were made via the Internet for this sector, resulting in £337 million of online spending. 

Non-specialised stores, or department stores saw an increase in the quantity of goods bought (7.3%) and the amount spent (5.6%) in December 2012 compared with December 2011. The prices of goods sold in this sector continued to decrease, falling 1.4% in the year to December 2012.

In December 2012 average weekly sales were £0.9 billion, 9.1% of sales (£80.6 million) were made via the Internet.

The Textile, clothing and footwear stores sector provided a downwards contribution to the quantity bought in all retailing with a fall of 3.5% in December 2012 compared with December 2011. The amount spent fell year-on-year by 2.8% and the prices of goods increased by 1.2% in the year to December 2012. However, even though overall sales for this sector were down, non-seasonally adjusted data show that online sales in these stores were up 26.3% in December 2012 compared with December 2011. 

In December 2012 average weekly sales were £1.2 billion; 10.3% of sales (£125.2 million) were made via the Internet.

Household goods stores in December 2012, saw an increase in the quantity bought (2.1%) and the amount spent (0.5%) compared with December 2011. The prices of goods sold fell by 1.7% in the year to December 2012.

In December 2012 average weekly sales were £0.7 billion; 6.1% of sales (£41.8 million) were made via the Internet.

Other stores in December 2012, saw an increase in the quantity bought (2.7%) and in the amount spent (1.0%) compared with December 2011. The prices of goods sold in this sector continued to decrease, falling 0.9% in the year to December 2012. 

In December 2012 average weekly sales were £1.2 billion; 7.4% of sales (£89.6 million) were made via the Internet.

The Non-store retailing sector in December 2012 saw a rise in the quantity bought, (11.8%), and in the amount spent,(10.4%) compared with December 2011. The prices of goods sold fell by 0.9% in the year to December 2012.

In December 2012 average weekly sales were £0.5 billion, 72.0% of sales, £389.5 million, were made via the Internet.

The non-store retailing sector comprises of stalls and markets, mail order and those retailers that sell mainly online.

Predominantly automotive fuel stores saw a year-on-year fall in both the quantity bought, (6.6%), and the amount spent, (6.7%). The prices of goods sold in this sector increased by 0.3% in the year to December 2012.

In December 2012 average weekly sales were £0.7 billion.

Distribution Analysis

Table 4 illustrates the mix of experiences among different sized retailers. It shows the distribution of reported change in sales values of businesses in the RSI sample, ranked by size of business (based on number of employees). This table shows for example, that the largest retailers, with 100 or more employees, reported an average increase in sales values of 1.9% between December 2011 and December 2012. In contrast smaller retailers employing 10 to 39 employees reported an average increase in sales of 7.7%.

Table 4, Changes in reported retail sales between December 2011 and December 2012 standard reporting periods (by size of business)

Analysis of individual returns from businesses

The reference table, Business Analysis (30.5 Kb Excel sheet) shows the extent to which individual businesses reported actual changes in their sales between December 2011 and December 2012. The table contains information only from businesses that reported in December 2011 and December 2012. Cells with values less than 10 are suppressed for some classification categories; this is denoted by n.a. Note that ‘large’ businesses are defined as those with 100+ employees and 10–99 employees with annual turnover of more than £60 million, while ‘small and medium’ is defined as 0–99 employees .

Background notes

1. Improvements to be introduced next month

   Following consultation with users, from the January 2013 publication (to be released on 15 February 2013), ONS will no longer produce the summary statistics table. Records of any significance will be highlighted in the main text of the statistical bulletin.
   

2. What's New

   Not applicable this month.

3. Understanding the data

   1.  Quick Guide to the Retail Sales Index (116.9 Kb Pdf)

   2. Interpreting the data

   • The Retail Sales Index (RSI) is derived from a monthly survey of 5,000 businesses in Great Britain. The sample represents the whole retail sector and includes the 900 largest retailers and a representative panel of smaller businesses. Collectively all of these businesses cover approximately 90 per cent of the retail sector in terms of turnover.

   • The RSI covers sales only from businesses registered as retailers according to the Standard Industrial Classification (SIC), an internationally agreed convention for classifying industries. The retail sector is division 47 of the SIC 2007 and retailing is defined as the sale of goods to the general public for household consumption. Consequently, the RSI includes all Internet businesses whose primary function is retailing and also covers Internet sales by other British retailers, such as online sales by supermarkets, department stores and catalogue companies. The RSI does not cover household spending on services bought from the retail sector as it is designed to only cover goods. Respondents are asked to separate out the non-goods elements of their sales, for example income from cafeterias. Consequently, online sales of services by retailers, such as car insurance, would also be excluded.

   • The monthly survey collects two figures from each sampled business: the total turnover for retail sales for the standard trading period, and a separate figure for sales made over the Internet. The total turnover will include Internet sales. The separation of the Internet sales figure allows an estimate relating to Internet sales to be calculated separately.

   3. Definitions and explanations

   • The value or current price series records the growth since the base period (currently 2009) of the value of sales ‘through the till’ before any adjustment for the effects of price changes.

   • The volume or constant price series are constructed by removing the effect of price changes from the value series. The Consumer Prices Index (CPI) is the main source of the information required on price changes. In brief, a deflator for each type of store (5-digit SIC) is derived by weighting together the CPIs for the appropriate commodities, the weights being based on the pattern of sales in the base year. These deflators are then applied to the value data to produce volume series.

   • The implied deflator or the estimated price of goods is derived by comparing the value and volume data non-seasonally adjusted. In general, this implied price deflator should be quite close to the retail component of the CPI.

   4. Use of the data

   The value and volume measures of retail sales estimates are widely used in private and public sector organisations. For example, private sector institutions such as investment banks, the retail sector itself and retail groups use the data to inform decisions on the current economic performance of the retail sector, these organisations are most interested in a long term view of the retail sector that can be obtained from year-on-year growth rates. Public sector institutions use the data to assist in informed decision and policy making and tend to be most interested in a snapshot view of the retail sector, which is taken from the month-on-month growth rates.
   

4. Methods

   • Information on retail sales methodology is available in Retail Sales Methodology and Articles
     

   1. Composition of the data

   Estimates in this statistical bulletin are based on financial data collected through the monthly Retail Sales Inquiry. The response rates for the current month reflect the response rates at the time of publication. Late returns for the previous month’s data are included in the results each month. Response rates for historical periods are updated to reflect the current level of response at the time of this publication.
   

   Table 5, Overall Response Rates

   		Overall response rates
   		(per cent)
   Period		Turnover	Questionnaire
   2012	Dec	89.9	64.0
   	Nov	94.8	75.9
   	Oct	97.1	81.4
   	Sep	96.9	82.5

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   2. Seasonal adjustment

   Seasonally adjusted estimates are derived by estimating and removing calendar effects (for example Easter moving between March and April) and seasonal effects (for example increased spending in December as a result of Christmas) from the non-seasonally adjusted (NSA) estimates. Seasonal adjustment is performed each month, and reviewed each year, using the standard, widely used software, X-12-ARIMA. Before adjusting for seasonality, prior adjustments are made for calendar effects (where statistically significant), such as returns that do not comply with the standard trading period (see section Methods, Calendar effects), bank holidays, Easter and the day of the week on which Christmas occurs. 

   The data collected from the retail sales survey is the amount of money taken through the tills of retailers; these are non-seasonally adjusted data. These data consists of three components:

   • trend which describes long-term or underlying movements within the data

   • seasonal which describes regular variation around the trend, that is peaks and troughs within the time series, the most obvious in this case being the peak in December and the fall in January

   • irregular or ‘noise’, for example deeper falls within the non-seasonally adjusted series due to harsh weather impacting on retail sales
     

   To ease interpretation of the underlying movements in the data, the seasonal adjustment process estimates and removes the seasonal component to leave a seasonally adjusted time series consisting of the trend and irregular components.

   In the non-seasonally adjusted retail sales index we see large rises in December each year and a fall in the following January, but these are not evident in the seasonally adjusted index. This peak in December is larger than the subsequent fall but the trend and irregular components in both months are likely to be similar, meaning that the movements in the unadjusted series are almost completely as a result of the seasonal pattern.

   3.  Calendar effects

   The calculation of the RSI has an adjustment to compensate for calendar effects that arise from the differences in the reporting periods. The reporting period for December 2012 was 25 November 2012 to 29 December 2012, compared with 27 November 2011 to 31 December 2011 the previous year. Table 6 shows the differences between the calendar and seasonally adjusted estimates.

   Table 6, Retail Sales and Calendar Effects

   		Year on year percentage change
   		Value	Volume
   Calendar adjusted		9.8	0.6
   Seasonally adjusted		0.7	0.3

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5. Quality

   1. Basic quality information
   

   • The standard reporting periods can change over time due to the movement of the calendar. Every five or six years the standard reporting periods are brought back into line by adding an extra week. For example, January is typically a four-week standard period but January 1986, 1991, 1996, 2002 and 2008 were all five-week standard periods. The non-seasonally adjusted estimates will still contain calendar effects. If the non-seasonally adjusted estimates are used for analysis this can lead to a distortion depending on the timing of the standard reporting period in relation to the calendar, previous reporting periods and how trading activity changes over time.

   • The non-seasonally adjusted series contain elements relating to the impact of the standard reporting period, moving seasonality and trading day activity. When making comparisons it is recommended that users focus on the seasonally adjusted estimates as these have the systematic calendar related component removed. Due to the volatility of the monthly data, it is recommended that growth rates are calculated using an average of the latest three months of the seasonally adjusted estimates.

   • When interpreting the data, consideration should be given to the relative weighted contributions of the sectors within the all retailing series. Based on SIC 2007 data, total retail sales consists of: predominantly food stores 41.3 per cent, predominantly non-food stores 41.6 per cent, non-store retailing 5.3 per cent and automotive fuel 11.8 per cent

   2. Standard errors

   The standard error of an index movement is a measure of the spread of possible estimates of that movement likely to be obtained when taking a range of different samples of retail companies of the same size. This provides a means of assessing the accuracy of the estimate: the lower the standard error, the more confident one can be that the estimate is close to the true value for the retail population. An approximate 95 per cent confidence interval for the index movement is roughly twice the standard error. The paper ‘Measuring the accuracy of the Retail Sales Index’, written by Winton, J and Ralph, J (2011) reports on the calculation of standard errors for month-on-month and year-on-year growth rates in the RSI as well as providing an overview of standard errors and how they can be interpreted.

   • The standard error for year-on-year growth in all retail sales volumes is 0.7 per cent. This means that the year-on-year growth rate for all retail sales volumes falls within the range 0.3 ± 1.4 per cent with a probability of 95 per cent.

   • The standard error for month-on-month growth in all retail sales volumes is 0.4 per cent. This means that the month-on-month growth rate for all retail sales volumes falls within the confidence interval -0.1 ± 0.8 with a probability of 95 per cent.

   3. Summary quality report

   A Summary Quality Report (114 Kb Pdf) for the RSI

   This report describes, in detail the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them.

   4. Revision triangles

   Revisions to data provide one indication of the reliability of key indicators. The table below shows summary information on the size and direction of the revisions which have been made to the volume data covering a five-year period. Note that changes in definition and classification mean that the revision analysis is not conceptually the same over time. A statistical test has been applied which has shown that the average revision in month-to-month statistics are not statistically different from zero.

   A spreadsheet giving these estimates and the calculations behind the averages in the table is available on the ONS website (1.84 Mb ZIP) .

   Table 7, All Retailing, Volume Seasonally Adjusted, Revisions Triangles Summary Statistics, December 2012

   Volume seasonally adjusted
   			Revisions between first publication and estimates twelve months later (percentage points)
   		Growth in latest period (per cent)	Average over the last five years (mean revision)	Average over the last five years without regard to sign (average absolute revision)
   Latest three months compared with previous three months		-0.6	-0.24	0.35
   Latest month compared with previous month		-0.1	-0.10	0.44

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6. Relevant links

   Methodological changes were introduced in the April 2009 and January 2010 releases. For more detail see:

   Changes to Retail Sales Methodology (124.3 Kb Pdf)

   Retail Sales Frequently asked Questions (82.3 Kb Pdf)

   Frequently asked Questions January 2010 (81.6 Kb Pdf)

   Classification changes in Retail Sales (150.8 Kb Pdf)

   Experimental measure of Internet Retail Sales - changes to methods (85.6 Kb Pdf)

    

7. Publication Policy

   Details of the policy governing the release of new data are available from the Media Relations Office. Also available is a list of the organisations given pre-publication access to the contents of this bulletin.
   

8. Accessing data

   The complete run of data in the tables of this statistical bulletin is available to view and download in electronic format using the ONS Time Series Data service. Users can download the complete bulletin in a choice of zipped formats, or view and download their own sections of individual series. The Time Series Data are available.

   Alternatively, for low-cost tailored data call 0845 601 3034 or email info@ons.gov.uk 

9. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

   These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

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