Retail sales growth slowing, says ONS

October retail sales were down on last year, with some retailers blaming the warmer weather for the dip.

New figures from the Office of National Statistics (ONS) found that the quantity bought in October fell by 0.3 per cent on a year ago. However, food stores were the largest contributor to this fall.

However, the ONS claimed that the underlying pattern in the retail industry in October was one of growth, with the most recent quarter increasing by 0.9 per cent on the previous quarter.

Sales also increased by 1.1 per cent over past three months compared with a year earlier.

October sales also grew by 0.3 per cent on September 2017. Non-food stores provided the largest contribution to this growth.

Online sales saw the strongest growth, with average weekly spend reaching £1.2 billion, an increase by 10.7 per cent year on year. Online currently accounts for 16.9 per cent of retail spending.

However, the ONS claimed that online spending had slowed in October when compared with the same month last year. This was the slowest year-on-year growth in the amount spent online since August 2015.

Interestingly, the ONS figures also highlighted that of every pound spent in retail in the UK, 42 pence was on non-food – higher than for any other category.

ONS senior statistician Kate Davies 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.”

Rachel Lund, British Retail Consortium head of retail insight and analytics, commented: “These figures suggest retail sales held up better in October than other sources have suggested, however there is still little cause to start the Christmas celebrations. Consumers are clearly feeling the squeeze, with sales down year on year and spending being directed into the second-hand market. It is therefore, vital that the Chancellor does not add to the pressures on UK households’ finances in his upcoming budget.

“ONS data can be hard to interpret at the best of times, but October’s figures were particularly puzzling. Data from ourselves and others have all suggested that October was a particularly difficult month for retailers. In stark contrast, the ONS called a continuation of the upward trend in sales growth, as their figures showed volumes rising on September.

“However, if we unpick the data, we can see that sales were down year on year, with volumes falling for the first time in four years and value growth slowing sharply. A good October last year did make it harder to outperform this year, but that’s not the whole story. UK retailers are feeling the impact of the consumer spending squeeze. In fact, when we strip out growth in spending on fuel, retail sales volumes barely grew on the previous month, a month in which sales fell.”

Hugh Fletcher, global head of consultancy and innovation at Salmon, said: “The ONS stats, much like BRC’s own figures released earlier this month, indicate slightly more sluggish consumer spending behaviour year on year – but actually a much more favourable August-October than 2016. October, in general, tends to be the calm before the November storm, when Black Friday sales kick off. Retailers – including the likes of Argos, Currys and Amazon – are all putting on their Black Friday sales much earlier than the day itself in anticipation of another bumper November of consumer spending.

“What is encouraging for many online retailers is the marked increase in year-on-year online sales values, up 10.7 per cent. As more consumers look to grab the best deals online – particularly around Black Friday week – it’s imperative companies have their systems and operations in place ready for a busy November period. Based on our own figures, we believe this month’s online sales will hit £20bn as retailers look to cash in on a consumer hunger to spend more now than potentially even Christmas. Certainly, November will provide some welcome relief for many retailers struggling from a more below-par October.”