Retail sales boosted in November by Black Friday

Overall retail sales by value jumped 4.7% year on year, according to the latest figures from the Office for National Statistics (ONS).

The amount taken by UK retailers was 1.4% higher in November than in October, when retail sales were broadly deemed disappointing.

The volume of items bought last month were up 1.6% year on year and 1.1% on a month-by-month basis.

ONS said Black Friday events contributed to a monthly increase in household goods sales volumes – up 2.9% – with electrical appliances making the largest contribution to the growth.

This conflicts with sales data from BRC and KPMG, which suggests Black Friday promotions failed to deliver the non-food boost the sector had hoped for.

According to their sales monitor, retail sales increased 0.6% year on year on a like-for-like basis and were up 1.5% overall in the four weeks to November 25.

Food inflation

Meanwhile, food sales values have increased 3.5% from 2016, but have fallen 0.1% by volume.

“Consumers may have been forced to spend more, rather than choosing to do so”

Ian Geddes, Deloitte

According to Deloitte head of retail Ian Geddes, this suggests that the value growth is largely down to rising inflation.

“Consumers may have been forced to spend more, rather than choosing to do so,” he said.

Total average store prices increased 3.1% in November compared to the same period last year, with price increases across all store types.

Food stores had the largest price increase since September 2013 of 3.6%.

Commendable figures

Geddes added that the overall growth, against strong figures in November 2016, should be commended, “particularly in the context of strong headwinds and rising inflation squeezing disposable income”.

“Retailers appear to have acknowledged the pressures faced by consumers and have adapted their business strategies accordingly through planned discounting and promotional campaigns,” he said.

Ikano Bank partner director Paul O’Leary said the increase in sales volumes is “good news for retailers on the face of it”.

He suggest that, to further capitalise on the resurgent market, retailers should create “bold and original reasons to visit high street stores” and develop initiatives to promote and reward loyalty. 

How will sales fare in December?

Looking ahead, Geddes said: “The next 10 days of pre-Christmas sales will be crucial for retailers.

“Trading is likely to peak on Friday 22nd, particularly for purchases of food and drink as consumers prepare for festive hosting. However, profitability is another matter, and margins are under intense pressure.

“One immediate risk is the weather – snow and freezing conditions dissuaded many shoppers from hitting the high street over the past week, and also delayed the deliveries of some online orders”

Lisa Hooker, PWC

“On the surface, today’s figures are promising, but we will have to wait until January before seeing what the true cost of this growth has been.”

PWC consumer markets leader Lisa Hooker said: “Given the continued resilience of consumer sentiment, we’re optimistic that Christmas shopping sales in December will hold up.

“However, one immediate risk is the weather – snow and freezing conditions dissuaded many shoppers from hitting the high street over the past week, and also delayed the deliveries of some online orders.”

The new year and beyond

Looking further ahead, Hooker said: “UK consumers remain cautious about big-ticket spending, particularly as income growth slows and inflation remains above 3%.

“We predict that furniture and electronics will be one of the first casualties of consumers tightening their belts, although we won’t see the impact of this on the high street until the first quarter of 2018, which is traditionally the time of year that people think about big purchases for their homes.

“If there will be one big winner this Christmas period, it will be the grocery sector, with consumers telling us in a recent survey that food for Christmas dinner tops their festive spending priorities.

“The combination of price inflation and a return of volume growth should boost the performance of the whole grocery sector over the Christmas period.”