October retail sales deliver a small scare

The October retail sales statistics delivered disappointment following a mild autumn, although the Golden Quarter may still shine through, says one retail expert.

The key findings from the statistics showed:

• In the three months to October 2018, the quantity bought in retail sales increased by 0.4 per cent when compared with the previous three months; a slowdown to growth when compared with the strong summer sales, which reached a high of 2.3 per cent in the three months to July.

• In October 2018, the quantity bought fell by 0.5 per cent when compared with September 2018, with a strong decline of 3.0 per cent in household goods stores following a particularly strong August and September.

• When compared with the previous year, the quantity bought in October 2018 increased by 2.2 per cent, with growth across all sectors except fuel, which fell by 1.8 per cent.

• Online sales as a total of all retailing increased to 18.0 per cent from the 17.7 per cent reported in September 2018, with textile, clothing and footwear stores continuing a record proportion of online sales at 18.2 per cent; this was despite a fall in total retail spending in this sector.

Phil Mullis, Partner and Head of Retail and Wholesale at leading accountancy firm, Wilkins Kennedy, said: “Halloween sales did little to keep the wolf from the door, but the scariest of sales statistics came from the fashion sector, which experienced a one per cent drop in sales quantity.

“However, as August and September delivered fairly strong retail figures, it is hardly surprising to see a small comedown. The mild autumn weather could also be another reason for the fashion sector experiencing a drop in sales.

“We also cannot ignore the 10-year anniversary of the recession; which, arguably, has been one factor in changing shopping habits – with consumers putting value high on their shopping lists. In the last decade, online shopping has boomed and continues to grow, which, as a result, has affected physical retail. A long period of austerity measures has seen an increase in consumers sticking to a budget. Some retailers have reacted by discounting at the expense of margins and ultimately, profits: continual discounting simply does not work and is not sustainable, whereas having a strong and stable value proposition for its customers is one of the core strategies for a successful retail business.

“We have also seen the rise in popularity in Black Friday over the last few years. We need to be careful that we do not slip back into a discounting strategy and hold too many events so close to Christmas, especially when retailers should lean heavily on full pricing during the Golden Quarter, rather than pushing sales for sales sake at the cost of profit.

“It will be interesting to see how Christmas sales start to impact the retail statistics and how much Black Friday influences the retail landscape.”