Lower Than Expected November Retail Sales

 The ONS has published retail sales data for November.

Key points:

• Retail sales volumes (quantity bought) are estimated to have risen by 0.2% in November 2024, following a fall of 0.7% in October 2024 (unrevised from the last publication). Over the year to November 2024, sales volumes rose by 0.5%. When compared with their pre-coronavirus (COVID-19) pandemic level in February 2020, volumes were down by 1.6%.
  
  
• There was a 0.3% rise across the three months to November 2024, when compared with the three months to August 2024. When comparing with the same period last year, there was a 1.9% rise. 
  
  
• Growth in supermarkets and other non-food stores was partly offset by a fall in clothing retailers.
  
  
• The official Black Friday was on 29 November 2024 and outside the November reporting period, which covers four weeks from 27 October to 23 November 2024. Seasonally adjusted estimates account for this shift in timing. 
  
  
• Historically, school half term for England and Wales typically fell within the October reporting period, but in 2024 fell within November. This is not adjusted for in the ONS' seasonal adjustment.
  
  
• Food stores sales volumes increased for the first time in three months, rising by 0.5% in November 2024, most strongly within supermarkets.
  
  
• Non-food stores sales volumes - the total of department, clothing, household and other non-food stores - rose 0.2% over the month with a strong positive contribution from other retail sales (not elsewhere specified). This sub-sector rose by 7.9% in November, rebounding from a 7.1% fall in October 2024. Household goods stores rose by 1.1%, with furniture stores having the largest upward contribution to growth.
  
  
• Partly offsetting this, clothing stores sales volumes fell by 2.6% in November, following a 3.5% fall in October 2024. This left clothing stores sales volumes at their lowest level since January 2022, with retailers reporting that economic factors were affecting sales.
  
  
• The amount spent online, known as "online spending values", fell by 4.3% during November 2024, the largest drop since March 2022. When compared with November 2023, sales values fell by 3.1%.
  
  
• Total spend - the sum of in-store and online sales - rose by 0.3% over the month. As a result, the proportion of sales made online decreased from 27.5% in October 2024 to 26.2% in November, its lowest level since February 2024.

Commentary

British Retail Consortium

Responding to the latest ONS Retail Sales Index figures, which showed sales up 0.2% by value, and up 0.1% by volume, Kris Hamer, Director of Insight at the British Retail Consortium, said:

"After a positive start to the Golden Quarter, November sales stagnated, with higher energy bills and low consumer sentiment impacting spending. Clothing suffered from a fall in sales, with milder weather putting many off updating their winter wardrobe. Consumers were also holding out for the main black Friday sales week to pick up beauty and electrical deals, which saw their first falls of the year. The final two months of the year account for over one-fifth of all sales, making it a period of vital importance – particularly for non-food. With a weak November performance, retailers will hope that shoppers come out in force in the final days before Christmas.

"Given the shaky start to the festive season, retailers will be looking at the £7bn in new costs from the Budget facing the industry in 2025 with increased concern. Higher employer national insurance contributions, a higher National Living Wage, and a new packaging levy will heap pressure on an industry that is already paying more than its fair share of tax. With sales growth unable to keep pace, retailers will have no choice but to raise prices or cut costs – closing stores and freezing recruitment. To mitigate this, Government must ensure that its proposed business rates reform does not result in any shop paying higher rates than they already do.”

PWC

Commenting on the Office of National Statistics retail sales index for November 2024, Lisa Hooker, PwC UK Leader of Industry for Consumer Markets:

"There was a small headline rise in November’s retail sales, up 0.2% in value terms compared with this time last year, and seemingly reversing the weaker trend from the previous couple of months. Today’s figures showed notable upticks in grocery, furniture and speciality retail sales, although these were all against particularly weak comparatives in October."

"However, these numbers should be interpreted with caution, as the reporting period this year ends one week prior to Black Friday unlike last year, and also includes the disruption caused by snow and Storm Bert in the second half of the month. The overwhelmingly online nature of Black Friday also meant that these figures showed a slowdown in ecommerce penetration, falling from 27.5% in October to 26.2% in this period, and reversing the trend this year, as shoppers waited for the best bargains to drop the week after reporting ended."

"Not surprisingly, fashion continued to be the weakest category, with clothing retail sales falling by 8.1% in volume terms and 6.8% in value terms compared with last November, not helped by the combination of a relatively mild start to the month slowing demand for seasonal lines and shoppers holding off for Black Friday. This means that fashion retailers have seen volumes decline in all but one month since September 2023."

"Overall, sales volumes remain muted and below pre-pandemic levels. However, given the exclusion of Black Friday from these results, they should not be taken as an indicator of wider retail performance in the run-up to Christmas. Other, more timely industry indicators as well as our own consumer research found greater interest in Black Friday this year, which would have boosted sales of fashion and electricals at the end of November, after the end of the reporting period."

"The all-important final weeks in the run-up to Christmas are also looking rosier for the retail sector, with signs of consumer confidence settling post-Budget, higher disposable income compared with last year, and less disruption due to everything from the weather to industrial disputes. So we remain cautiously optimistic that December’s retail sales will outperform, in line with consumers’ expectations, with our own forecast suggesting that spending on presents and festivities will increase by 5% this year."

Source : ONS, BRC, PWC

Image : Jason Batterham / Shutterstock / 671551474

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