The latest data released by the Office for National Statistics (ONS) reveals a slight recovery in UK retail sales for the month of October, with the fashion industry leading the way. After a significant fall of 1.5% in September, retail sales volumes increased by 0.6% in October compared to the previous month. However, it is important to note that September’s decline was largely due to the extra public holiday for the Queen’s funeral and the impact of her death on consumer behavior in the preceding week-and-a-half. On a year-on-year basis, retail sales volumes were down by 6.1% in October.
Although the value of retail sales rose by 1.8% compared to the previous month and 4.8% compared to the previous year, it became apparent that these gains were driven by price increases caused by inflation. When considering volume alone, retailers still face significant challenges. With the exception of food stores, all sectors saw an increase in sales volume on a month-on-month basis. Non-food stores experienced a 1.1% rise in sales volumes, but remained 1.7% below pre-pandemic levels in February 2020. Clothing stores saw a 2.5% increase in sales volumes compared to the previous month, but still fell short by 3.7% when compared to February 2020 levels. Department stores experienced a 0.3% decrease in sales volumes.
The online retail sector, which is primarily comprised of non-store retailers, saw a 1.8% increase in sales volumes in October following a decline of 2.5% in September. Compared to February 2020 levels, online sales were 21.2% higher. The proportion of retail sales conducted online remained steady at 26.1% since May 2022. However, online sales of textiles, clothing, and footwear were down by 8.4% compared to the previous year and 2.7% compared to September. Department store online sales also declined by 6.8% year-on-year and 1.7% compared to the previous month.
Jacqui Baker, the head of retail at RSM UK, a leading audit, tax, and consulting firm, commented on the retail sales figures. While there was a positive development in clothing sales last month, she pointed out that the upcoming winter season poses challenges for retailers. Consumers are adjusting their spending decisions due to the cost-of-living crisis. Despite the recent cost-of-living allowance provided to consumers to offset the energy price cap increase, there is little indication of early Christmas shopping enthusiasm. As a result, many retailers have already started offering early discounts. The upcoming World Cup, Black Friday, and Christmas period may provide some temporary relief, but the question remains whether these will only be short-term solutions. Retailers are particularly relying on Black Friday to help clear their excess stock, but with demand stagnating, they may not find the solution they are hoping for.
Useful links:
1. Office for National Statistics (ONS) retail sales data
2. RSM UK
