19 Sep 2019

Back-to-school retail bounce fails to get top marks

With the major school shopping season over, retailers are now heading into their golden trading period wondering if stockpiling is the key to a Merry Christmas.

The key findings from the Office for National Statistics showed:

  • In the three months to August 2019, moderate growth in the quantity bought continues at 0.6% when compared with the previous three months, with growth in non-store retailing being the main contributor to the increase.
  • The monthly growth rate in the quantity bought in August 2019 fell by 0.2%; non-store retailing was the largest contributor to this fall, partially offsetting the strong growth reported last month for this sector.
  • The year-on-year growth rate shows that the quantity bought in August 2019 increased by 2.7%; this is a slowdown compared to the stronger growth experienced earlier in the year which peaked at 6.7% in March 2019.
  • Online sales as a proportion of all retailing fell to 19.7% in August 2019, from the 19.9% reported in July 2019.

Phil Mullis, Partner and Head of Retail and Wholesale at one of the UK’s leading business advisory firms, Wilkins Kennedy, said: “We haven’t seen any significant growth since March when retailers felt the benefit of stockpiling in preparation for the initial Brexit deadline – however – with warehouse space now at a premium with Christmas stock already piling in, a lot of retailers may not have the same luxury come 31 October.

“Business figures such as Next’s Lord Wolfson have just this week stated that consumers will only refrain from spending when their income is directly impacted by events such as inflation, which may be true for smaller ticket items, however, bigger ticket items have been and will continue to suffer over the coming months as people hold back from big purchases.

“It was initially surprising to see online sales drop in August, but it is an anomaly at worst as we have to factor in Amazon Prime’s big discount sales in July which would have boosted numbers during that month.

“The growth of the retail market is still in the black, which on the face of it, looks remarkable given the volatile Brexit backdrop however, the growth is consistently contracting month-on-month, and as we enter the golden Christmas period and Brexit D-Day, retailers have to answer the key question: to stockpile or not to stockpile?

“If the pound takes a hit then the cost of imports increases, as could the general cost of products on the high street – this will tempt many into ordering more stock ahead of schedule.”

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