20 Dec 2018

November’s retail sales nose ahead despite the gloom

 

Retailers are dreaming of a black Christmas following a positive November amid difficult trading conditions – will it be more of the same in December or will Christmas be cancelled?

The key findings from the Office for National Statistics showed:

  • In the three months to November 2018, the quantity bought in retail sales showed an increase of 0.4% when compared with the previous three months due to growths in non-food stores and online retailing.
  • The quantity bought in November 2018 when compared with October 2018 increased by 1.4%, with a strong monthly growth of 5.3% in household goods stores.
  • Strong growth of 5.3% in household goods stores provided the largest contribution to overall growth within non-food stores.
  • Retailers reported strong growth on the month due to Black Friday promotions in November, which continues the shifting pattern in consumer spending to sales occurring earlier in the year; the non-seasonally adjusted growth rate in November 2018 was 13.2% in comparison with 8.7% in November 2013.
  • In November 2018, online sales as a proportion of all retailing exceeded 20% for the first time, with all online retailing accounting for 21.5% of total retailing on a non-seasonally adjusted basis.

 Phil Mullis, Partner and Head of Retail and Wholesale at leading accountancy firm, Wilkins Kennedy, said:

“The positivity of November’s figures surprise me and should be received with caution.

“Retailers, particularly those in fashion, cite November as one of the most difficult trading months – one of the key reasons being Black Friday because although the discounts prompt more sales, they are at the expense of any significant profit.

“Black Friday has evolved from a one-day flash sale to a longer period of time, which has driven the 13.2% growth in sales year-on-year.

“One of the underlying issues retail currently is although we look at wage inflations at 3.3% - which looks like a good thing – and inflation at 2.3%, overall consumer confidence still continues to wain with consumers uncomfortable about the financial impact on them from political uncertainty.

“We’ll get a better picture on the impact Black Friday has had when December’s figures are published, which is an absolutely critical month for most retailers.

“Failure to have a good December could send some retailers into free-fall; particularly those with too many physical stores as retail spend continues to shift online.

“To avoid trouble non-food retailers really need to have a laser focus on who their customers are and what they want–whether it’s to do with customer service, availability or innovation.

“The fact that more than 20% of all retail sales are now taking place online is a key area that retailers need to adapt to in the future.

“Retailers will be hoping that the final weekend before Christmas will be a bumper period for the high street to build solid foundations for 2019, particularly with interest rates likely to rise and place further pressure on people’s discretionary spend.”

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