There was some better news for the retail sector today, with data pointing to a pick up in sales performance following a lack of growth in recent months as the Covid bounce back eased.
Office for National Statistics (ONS) figures show retail sales volumes rose by 0.8% in October, from a revised unchanged (0.0%) position between August and September (previous estimate was a 0.2% fall). The stronger-than-expected increase was driven by a rise in spending on toys and clothes as consumers started their Christmas shopping earlier than normal amid concerns around product shortages.
Food store sales volumes fell by 0.3% on the month, although they remain 3.4% above pre-pandemic levels.
With the return of more people to town and city centres, online sales as a proportion of overall retail sales fell to 27.3%, the lowest level since the start of the pandemic. However, it remains significantly higher than pre-Covid, suggesting a permanent shift to higher levels of online shopping.
“After five months of no growth, retail sales picked up in October,” said ONS chief economist Grant Fitzner. “Although sales overall are above pre-pandemic levels, it remains a mixed picture.”
Helen Dickinson, Chief Executive of the British Retail Consortium, said that retailers were putting in “a gargantuan effort” to make sure they had Christmas stock amid continuing supply chain problems.
“Labour shortages throughout the supply chains – from farms to distribution – are pushing up costs and creating some gaps on the shelves,” she said.
“Nonetheless, retailers are prioritising Christmas essentials, and many have laid out their festive offerings a little earlier to ensure everyone has time to buy treats and decorations before the big day.”
She said that retailers were hoping demand would be sustained throughout the Christmas period. “However, challenges remain, with higher prices looming and many households facing rising energy bills.”
Meanwhile, separate data released today shows consumer confidence grew this month despite increased concerns around rapidly rising inflation.
Overall, consumer confidence rose 3 points to -14 compared with October, according to the GfK consumer confidence barometer. Four measures were up, and one was down in comparison to the last announcement.
“Headline consumer sentiment has ticked upwards this month despite decade-high inflation, fears of higher prices and worries over rising interest rates, and as the deepening cost-of-living squeeze leaves UK household finances worse off this winter,” commented Joe Staton, Client Strategy Director at GfK.
He suggested that the main highlight for retailers is the seven-point jump in major purchase intentions in the run-up to Black Friday and Christmas, adding: “Is this a sign that shoppers are ready to bounce back, after last year’s cancelled family gatherings, with a Christmas splurge in coming weeks? That’s how it looks – but consumers also know that when the festivities are over it’s going to be a tough year in 2022.”
