Industry's insiders doubt ONS retail sales

Monday, 20 January 2014
Industry data published by the Office for National Statistics (ONS) on Friday concerning retail sales from the past year in the UK have caused a series of mixed reactions from analysts and retailers alike. According to the figures released by ONS, non-food retailers throughout the country witnessed sales rise 4.2 percent in the month of December. Small retail businesses, with less than 100 employees, experienced a bigger growth year-on-year compared to large retail businesses and were up by 8.1 percent, with large stores up 2.6 percent.

The figures also indicated an annual rise in volumes purchased of 5.3 percent, which is the fastest growth reported since October 2004. Internet sales also increased 11.8 percent in December 2013 compared with December 2012, and grew 1.8 percent from November 2013, according to the ONS report.

ONS data raises concerns about small business paving the way for recovery

However, this data conflicts with figures published by the British Retail Consortium (BRC), which focuses on larger retail businesses and stores and indicates that retail sales were up 1.8 percent in December 2013 from December 2012, the lowest growth witnessed during the year. Other independent retailers and analysts alike shared their doubts about ONS report which indicates that small retail businesses are leading the way for economic growth on the British high street.

“These figures raised all our eyebrows” said Micheal Weedon from the British Independent Retailers Association to the Guardian. “The shops in our community are seeing flat sales at best,” he added, as most non-food retailers were struggling with prices being marked down and lack of shoppers visiting the high street last month. “What we've seen from our figures in three out of the four quarters is that turnover has fallen because prices have been down,” concluded Weedon.

Adding to the growing doubt about the ONS report are figures from 600 retailers and brands on Regent, Bond and Oxford street in the West End of London, which mostly consists of large stores and franchises indicate a 10 percent increase in year-on-year sales for December 2013, as the rest of the country reported an average growth of 6.1 percent.

Nick Bubb, an independent analyst and a member of the RetailThinkTank team, believes that the figures from ONS do not convey the whole picture. “The response rate from small businesses to the monthly ONS survey is very low, which is why the ONS has to estimate their sales and it constantly seems to assume that the weak/missing retailers will have done as well as the good/reporting retailers. As [more] figures come in later, the months will get revised in due course,” commented Bubb.

ONS previously indicated that its retail sales data is seasonally adjusted, which means regular changes in retail sales at certain points of the year are taken into account (such as Christmas), but it does not take the effects of extreme or unseasonal weather changes into account. Therefore, some economists and analysts have also suggested that the surge in sales at small retail businesses could be due to the poor weather witnessed throughout December, which caused shoppers to turn to local stores or online sales instead of venturing out to larger retail stores.

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