ONS: Retail Sales Fell Unexpectedly In October

The ONS has published retail sales data for October, covering the period 29 September 2024 to 26 October 2024. Historically, school half term for England and Wales typically falls within the October reporting period but did not for October 2024. This is not adjusted for within the seasonal adjustment made by the ONS.

Key points:

• Retail sales volumes (quantity bought) are estimated to have fallen by 0.7% in October 2024, following a rise of 0.1% in September 2024 (revised down from 0.3% in our last publication).
  
  
• Non-food stores sales volumes fell on the month as retailers reported that Budget uncertainty affected sales.
  
  
• More broadly, sales volumes rose by 0.8% in the three months to October 2024, when compared with the three months to July 2024.
  
  

• Non-food stores sales volumes – the total of department, clothing, household and other non-food stores – fell by 1.4% in October 2024, following a rise of 2.3% in September. Retailers across a range of industries suggested that low consumer confidence and uncertainty around the Budget announcement (which took place on 30 October 2024) affected sales.

• The strongest subsector fall was within clothing stores, which fell by 3.1% over the month to October 2024. This fall follows growth in previous months attributed to end of season sales and improved weather, see Retail sales, Great Britain August 2024.
  
  
• Other non-food stores also fell by 1.4% over the month following strong growth in September 2024. Within this subsector, the strongest downward contribution was from other retail sales (not elsewhere specified), which includes activities of commercial art galleries.
  
  
• The amount spent online, known as "online spending values", fell by 1.2% during October 2024, but rose by 5.0% when compared with October 2023.
  
  
• Total spend – the sum of in-store and online sales – fell by 0.6% over the month. As a result, the proportion of sales made online decreased from 27.8% in September 2024 to 27.7% in October 2024.

Commentary

Greg Zakowicz, senior e-commerce expert at Omnisend, comments: “A fall in sales in October does not bode well for the retail industry, as this month typically marks the start of the festive shopping season. Retailers large and small will be looking at today’s figures and hoping that it is not a sign of things to come. 

“Uncertainties around the Autumn Budget and how this could affect disposable income have been cited as reasons for the fall, but that would only be a temporary hiccup. Sales in the three months to October were still up, so it’s not all bad news for retailers today.

“Amazon launched a second Prime Day shopping event which took place in October this year and while these usually prove popular for the e-commerce giant, most consumers will be holding off until Black Friday to part with their cash. 

“The trend of ‘Christmas creep’ could help bolster the retail industry in November, with many Black Friday sales lasting throughout the month. 

“Affordability concerns will linger this Christmas, with our findings showing that while over a quarter of Brits plan to spend more on gifts this year, 37% of Brits plan to spend less than they did in 2023. 

“We’re seeing a rise in self-gifting, with our research concluding that nearly half of Brits are using Black Friday to buy treats for themselves. While budgets might be slashed on gift-giving, it doesn’t reflect on spending overall.

“Small businesses are feeling the squeeze more than larger e-commerce sites such as Amazon, which is recording strong growth. There is also a lot of speculation about how the changes to National Insurance will affect the retail sector.

“The British public has solidarity with small businesses, despite the tempting bargains being offered by shopping giants. Our data shows that two-thirds say they shop at smaller, independent retailers because they feel good about supporting them. 

“The final months of the year are the most crucial for the industry, and while household budgets are still squeezed, we are cautiously optimistic that Christmas will fare better for retailers than last year.”

BRC Commentary

Responding to the latest ONS Retail Sales Index figures, which showed sales up 1.8% by value, and up 2.0% by volume, Kris Hamer, Director of Insight at the British Retail Consortium, said:

While October produced a positive start to the ‘golden quarter’, with year-on-year growth for the fourth month in a row, there was a monthly decline due to pre-Budget jitters from households. Fashion took the brunt of this hit, especially as the milder weather last month put off winter purchases. Electricals performed well as people continued to upgrade their tech with the latest models. Health and beauty had yet another strong month of sales growth, especially with the popularity of beauty advent calendars which went on sale.

This additional revenue is essential as retailers face over £7bn of additional costs in 2025 alone, as changes to Employers’ National Insurance contributions, the increase in minimum wage, and new packaging taxes come into effect. These changes will pile pressure onto an industry that already pays far more than its fair share in business taxes, and will make job losses and store closures inevitable. To avoid a cliff edge of costs in April 2025, Government must reconsider the existing timelines for the new packaging levy, while ensuring any changes to business rates offer a meaningful reduction for all retailers as early as possible.

Source : ONS, Omnisend, BRC

Image : shutterstock / 130030334 / MJTH

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