1. Main points

  • The underlying pattern in the retail industry in October 2017, as suggested by the three-month on three-month measure is one of growth, with the quantity bought increasing by 0.9%.

  • The quantity bought in October 2017 increased by 0.3% compared with September 2017; non-food stores, in particular second-hand goods stores (charity shops, auction houses, antiques and fine art dealers) provided the largest contribution to this growth.

  • The longer-term picture as shown by the year-on-year growth rate shows the quantity bought fell by 0.3% in comparison with a strong October 2016; food stores provided the largest contribution to this fall.

  • Average store prices increased by 3.1% compared with October 2016, with the largest contribution from food stores where average prices rose by 3.5%, the largest year-on-year price increase since September 2013.

  • Online sales values increased year-on-year by 10.7%, accounting for approximately 16.9% of all retail spending.

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2. Statistician’s comment

Commenting on today’s official retail figures, Kate Davies, ONS Senior Statistician said:

“We are continuing to see an underlying picture of steady growth in retail sales, although this October suffered in comparison with a very strong October in 2016. Growth month-on-month in October was particularly strong in the second-hand goods sector, which includes auction houses and antique dealers.”

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3. Things you need to know about this release

This bulletin presents estimates of the quantity bought (volume) and amount spent (value) in the retail industry for the period 1 October 2017 to 28 October 2017. 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.

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4. Main figures for total retail sales

Table 1 shows that in October 2017, the underlying pattern in the retail industry as suggested by the three-month on three-month measures was one of growth, with the quantity bought increasing by 0.9% and the amount spent increasing by 1.5%. In the more volatile month-on-month measure, the quantity bought and the amount spent both increased by 0.3%. The longer-term picture is mixed, with the quantity bought falling in October 2017 by 0.3% compared with October 2016 and the amount spent increasing by 2.8% over the same period. The difference between the two can be attributed to a 3.1% increase in the implied deflator or average store prices.

Figure 1 provides a comparison over time of the quantity bought and average store prices in the retail industry.

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

The monthly path can be volatile as seen with the erratic month-on-month movements. The underlying three-month on three-month index removes this volatility and provides an estimate of the underlying pattern in the retail industry.

In recent months, the quantity bought in retail sales has shown an underlying pattern of growth, despite rising store prices. There was a short period of contraction from January to March 2017 followed by a more sustained period of growth.

In the early periods shown, the quantity bought remained relatively flat up to May 2013, as average prices began to flatten then fall consumers began to purchase more goods. Prices began to rise again towards the end of 2016, this upward trend continued with a short period of contraction followed by growth in recent months. The three months to October 2017 was the seventh consecutive monthly increase for the three-month on three-month movement.

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5. Retail sales by store type

The retail industry is divided into four main store types:

  • predominantly food stores (for example, supermarkets, specialist food stores and sales of alcoholic drinks and tobacco)

  • predominantly non-food stores (for example, department stores, textile, clothing and footwear stores, household goods stores and other stores)

  • non-store retailing (for example, mail order, stores that sell predominantly online, catalogues and market stalls)

  • stores selling automotive fuel (petrol stations)

In 2016, for every pound spent in the retail industry:

  • 40 pence was spent in food stores

  • 42 pence in non-food stores

  • 9 pence in non-store retailing

  • 9 pence in petrol stations

Using these proportions as weights we can calculate the contribution that each store type has on the year-on-year and month-on-month estimates for October (Figures 2 and 3).

(More information on RSI weights can be found at Industry weights.)

The main contribution to the overall year-on-year decrease of 0.3% in the quantity bought in retail sales came from food stores, providing a negative contribution of 0.9 percentage points; the largest year-on-year fall since April 2012. Non-food stores also fell, providing a negative contribution of 0.4 percentage points. The only store type with a positive contribution of 1.0 percentage point came from non-store retailing.

The amount spent in retail industry increased by 2.8%, with positive contributions from all store types. The largest contribution to this growth came from non-store retailing.

Much of the difference between the quantity bought and the amount spent in the retail industry can be attributed to the change in average store prices as seen in Table 2.

In October 2017, average store prices increased by 3.1% compared with October 2016. Food store prices rose by 3.5%; the largest year-on-year price increase since September 2013. Consistent with the Consumer Prices Index (CPI release, October 2017), food stores provided the largest contribution to the increase in average store prices.

The quantity bought in total retail sales increased by 0.3 percentage points on the month, following declines across all main stores in September 2017. The main contribution to the monthly increase was from non-food stores, contributing 0.4 percentage points to total retail sales, followed by petrol stations (0.2 percentage points) and was partially offset by negative contributions from food and non-store retailing.

The amount spent within all stores increased by 0.3 percentage points.

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6. Focus on non-food stores

Non-food stores has the largest weight in total retail sales with 42 pence in every pound spent in this sector. Table 3 shows the monthly and year-on-year growth for each store type within non-food stores along with their respective weights.

In October 2017, each store type, with the exception of household goods stores, saw the quantity bought fall in comparison with October 2016 resulting in the quantity bought in non-store retailing decreasing by 1.0%. The amount spent increased by 1.7% year-on-year due to increases across all sectors within non-food stores. This was due mainly to increased prices in all sectors when compared with October 2016. Prices are 2.5% higher than a year ago within non-food stores.

The quantity bought and amount spent in non-food stores increased on the month due to increases in all store types except textile, clothing and footwear stores. Feedback from a number of clothing retailers suggested that a particularly mild October meant that consumers delayed purchasing winter season clothing. The Met Office summary for October 2017 said that the UK mean temperature was above the long-term average for this period.

Despite having the second largest weight of 11.8% in non-food stores, the declines in textile, clothing and footwear stores were offset by the monthly increases in all other store types within non-food stores; particularly other stores. Other stores is the largest component within non-food stores and with a month-on-month increase of 3.1% in the quantity bought and 2.8% in the amount spent, this store type provided the largest contribution to the monthly growth in non-food stores.

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7. What is happening in other stores as the main contribution to non-food stores?

Other stores include a range of store types including pharmaceutical, medical, cosmetic and toilet articles, watches and jewellery, telecommunications equipment and second-hand goods. This can result in volatile monthly movements in this industry as each sector behaves differently each month. Figure 4 shows the average weekly index alongside the rolling three-month on three-month index.

While other stores have experienced periods of growth in 2013 and 2014 and again between January 2016 and November 2016, the three months to October 2017 shows a flatter picture and returns to a similar level to the beginning of 2017. Figure 5 shows the contribution of each store type within other stores to the total month-on-month change in the quantity bought.

In October 2017, other non-food stores contributed 0.4 percentage points to the overall monthly growth in retail sales. The largest contribution within other stores was second-hand goods stores, which includes auction houses, charity shops, antique and fine art dealers. Computers and telecommunications equipment closely followed second-hand goods in terms of its contribution to growth. All other sectors except other new goods in specialised stores, flowers, plants and seeds, cosmetic and toilet articles and dispensing chemists showed a positive monthly contribution.

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8. What’s the story in online sales?

Internet sales are estimates of how much was spent online through retailers across all store types in Great Britain.

In October 2017:

  • average weekly spending online was £1.2 billion; an increase of 10.7% compared with October 2016

  • the amount spent (value) online accounted for 16.9% of all retail spending, excluding automotive fuel, compared with 15.7% in October 2016

The general trend in online sales has been one of growth showing a change in consumer habits from shopping in-store. However, October’s growth in online spending slowed to 10.7% when compared with October 2016. This is the slowest year-on-year growth in the amount spent online since August 2015.

Figure 6 shows how each sector contributes to the value growth in online sales. Sub-sectors within non-food stores are included to provide further detail (non-specialised, textiles, clothing and footwear, household goods stores and other stores). Non-store retailing accounts for the largest component of online sales and contributes the largest positive contribution to growth at 5.7 percentage points.

The main contributor to the slowdown in growth is other non-food stores, which is the only sector to show a decline in October 2017 at negative 3.2 percentage points. All sectors, except non-specialised stores, demonstrated a slowdown in year-on-year growth.

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10. Quality and 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

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Contact details for this Statistical bulletin

Rhian Murphy
retail.sales.enquiries@ons.gsi.gov.uk
Telephone: +44 (0)1633 455602