Retail Sales Rose 1.2% In February

The ONS has published retail sales data for February 2023.

Main points:

• Retail sales volumes are estimated to have increased by 1.2% in February 2023, following a rise of 0.9% in January 2023 (revised from a rise of 0.5%); when compared with the same month a year earlier sales volumes fell by 3.5%.
  
  

• Looking at the broader picture, sales volumes fell by 0.3% in the three months to February 2023 when compared with the previous three months.

• Total non-food stores sales volumes (total of department, clothing, household and other non-food stores) rose by 2.4% over the month, following a rise of 1.0% in January 2023. Despite this pickup, sales volumes fell 1.7% when compared with the same month a year earlier.

• Within non-food, department store sales volumes rose by 5.5% over the month, while clothing stores rose by 2.9%. Growth in both sub-sectors was because of strong sales at discount stores.

• Other non-food stores sales volumes rose by 1.7% in February 2023, because of strong growth in second-hand goods stores, such as auction houses and charity shops. Household goods stores sales volumes fell by 0.3% in February 2023.

• Food store sales volumes rose by 0.9% in February 2023 following a rise of 0.1% in January 2023, with some anecdotal evidence of reduced spending in restaurants and on takeaways because of cost-of-living pressures.

• Non-store retailing (predominantly online retailers) sales volumes rose by 0.2% in February 2023, following a rise of 2.9% in January 2023. The proportion of online sales was broadly unchanged at 25.4% in February 2023 from 25.3% in January 2023. The proportion of retail sales taking place online remains above the pre-coronavirus pandemic levels (19.8% in February 2020).

• Automotive fuel sales volumes fell by 1.1% in February 2023 following a rise of 1.1% in January 2023 when rail strikes may have increased car travel. Sales volumes were 8.9% below their pre-coronavirus February 2020 levels.

Commentary

Commenting on the Office of National Statistics retail sales index for Feb 2023, Lisa Hooker, Industry Leader for Consumer Markets at PwC, said:

"Retail sales came in better than expected in February, up on both the previous month and the same time last year. The unexpected increase in inflation reported earlier this week meant that sales volumes still declined by 3.3% year-on-year excluding fuel, but this was a shallower decline than that seen in recent months.

While better than expected, this was not a surprise, as retail benefitted from a number of factors including a soft comparative trading performance the previous year when poor weather affected sales; a shift from out-of-home leisure to eating and drinking in home; and generally improved consumer confidence which we expect to see reflected in our upcoming consumer sentiment index.

We are not only seeing an improvement in grocery, but there also appear to be green shoots in other categories, with small month-on-month improvements in volumes for fashion retailers and other specialty retailers, albeit sales of household goods remained weak. Consumers are still looking to prioritise special occasions and certain experiences such as Valentine Day helping fragrances and jewellery sales and strong holiday bookings.

This year’s milder, dryer weather also benefited high streets, with the penetration of online sales stable at just over 25%. This is well below the pandemic peak of almost 38%, and not much higher than the pre-pandemic trend would have suggested. This was also reflected in our more recent Store Openings and Closures research for 2022, which showed the smallest number of store closures in almost a decade.

Overall, retail spending appears to be more resilient than many expected at the start of the year. While consumers face cost-of-living challenges and interest rate rises, this has been offset to some extent by wage rises and caps on energy prices. If, as expected, inflation continues to abate, retailers will be hoping the current sales momentum picks up pace as the year progresses, possibly even in time for May’s Coronation, but certainly towards the end of the year when we expect disposable incomes to start increasing in real terms."

Source : ONS, PwC

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