There was an unexpected fall in retail sales last month as shoppers remained cautious despite promotional activity around Black Friday. However, food volumes picked up as people started preparing for Christmas early.
The data from the Office for National Statistics (ONS) shows total sales volumes slipped 0.4% compared to October when they had risen 0.9%. The latest figure means volumes are down 5.9% year-on-year as shoppers rein in their spending due to the cost of living crisis.
Economists had expected to see monthly growth of 0.3%, given reports of a spike in spending around Black Friday. However, apart from food, there was a negative performance across the board, with overall non-food sales volumes falling by 0.6% in November.
Non-store sales – which mainly covers online retailers – fell by 2.8%. The figure has been declining for some time since Covid restrictions were lifted and people could return to shops. However, the data suggest that worries over postal strikes and the weather have led to a further swing towards high street shopping.
ONS director of economic statistics Darren Morgan said: “Retail sales fell overall in November, driven by a notable drop for online retailers, with Black Friday offers failing to provide their usual lift in this sector.”
But he pointed out that department stores had reported better sales, with reports that the longer Black Friday sales period had drawn in more customers.
Meanwhile, sales volumes in food stores rose 0.9% last month amid signs that shoppers were stocking up on festive food and alcohol early to try to spread the cost of Christmas.
However, with inflation still rampant, analysts suggested that consumers were focusing on essentials like food.
Speaking to the BBC this morning, the boss of the Waterstones bookshop chain, James Daunt, said most retailers are still “probably expecting 2023 to be a time to batten down and concentrate on the basics because it is going to be tough”.
Highlighting that shoppers have less money to spend because of higher energy bills and interest rates, he added: “If you’re a retailer, that means you’re going to be selling less.”
Meanwhile, Jacqui Baker, head of retail at consultancy firm RSM, commented: “With swathes of industrial strikes and extreme weather creating further barriers for consumers to splurge, the chance to recoup losses and offload winter stock will have been cut short in December.
“It’s likely to be a disappointing end to the year for the retail sector.”
Hopes were raised earlier this week that inflation had peaked after the core consumer prices index measure eased back in November, led by falling motor fuel prices.
The Bank of England gave some support to that theory yesterday after it slowed the pace of interest rate rises, raising them by 0.5 percentage points following a 0.75 percentage point hike the month before.
Andrew Bailey, the governor, pointed to a “glimmer” of hope that the worst was behind us – also expressing hope that the economy was performing a bit better than the Bank had expected. However, it remains concerned that the country’s tight labour market will fuel inflation through high pay rises.
NAM Implications:
- ‘Cash-strapped’ means cash-strapped…
- Ditto, fear, uncertainty, job insecurity, unprecedented, universal distrust, soaring inflation…
- Suppliers and retailers need to be thankful for any sales, in the current climate,
- And add 2023, 2024, etc?
