The health of our economy can be judged by many measures but perhaps the closest to our daily lives are the monthly retail sales figures. They put a spotlight on what we’re buying from whom and whether we’re opening up our wallets and purses more or keeping them shut.
We get a few sets of numbers to look at. The Retail Sales Monitor from the British Retail Consortium (BRC) and the UK retail team at KPMG is published a few days after the end of the month. We also get the Monthly Retail Sales figures from the Office of National Statistics (ONS), which come out later in each month. These were published on Thursday and showed growth at its fastest rate in 14 years during October.
There is also a raft of other retail-related data published regularly by both specialist retail consultancies and business organisations, but the two mentioned above are the most widely publicised and closely watched. They offer different sets of numbers, from different sources and are presented in different degrees of detail. Both however share a flaw: a tendency in their press releases and comments to rely on spurious “weather related effects” to explain away many of the month on month changes in their data.
Questions of detail
On the surface, the data looks robust. The BRC/KPMG data comes from a survey of BRC members, a cross-section of high street brands, small businesses and online retailers, ranging from pure plays to major brands. The ONS figure comes from a survey every month of 5,000 businesses across the UK which includes all large retailers and a representative panel of smaller businesses.
The headline numbers from both sets of data are covered widely in the mainstream press and the business or retail media. The BRC/KPMG announcement often gets the greater coverage. It has the simple advantage of appearing first, and provides some brief analysis or comments from senior figures at BRC and KPMG.
The BRC/KPMG measures are considered to be fairly comprehensive. They are collated from data across more than 30 categories (including Groceries, Clothing & Footwear, Health & Beauty, and Furniture) and the participating retailers represent 60% of the sector by turnover, including more smaller shops. However, the greater detail in the ONS numbers, as well as revisions and updates after publication, mean these may represent the more thorough analysis. Take both together and you end up with a reasonably accurate picture of the spending patterns of UK consumers.
Too hot to shop
However, in my view, the credibility of this data is undermined by the weather-related excuses that are frequently provided as the main explanation for any downward sales trends. This happens so often it has almost become the retail equivalent of the “wrong type of leaves on the line” defence used by train operating companies for delayed or cancelled services.
It is therefore interesting to highlight some of the explanations which have been provided over recent months and which continue a trend I have observed for some time.
Reflecting on retail sales in May, KPMG believed that:
… the appearance of some spring sunshine encouraged consumers to hit the sales and take advantage of early summer promotions … retailers will be hoping that the feel good factor coupled with a dose of summer sunshine will keep the tills ringing over the summer months.
In June, KPMG suggested that rain had delayed sales on the High Street, particularly in fashion while consumer attention shifted indoors to escape downpours, offering a fillip to furniture and home accessories. Summer wardrobes remained bare, it said, as “sales of women’s fashion and footwear plummeted following one of the wettest and dullest starts to a UK summer since records began”.
The following month, KPMG stated that:
… the sun shone down on retail fortunes in July, and warmer weather helped blow away some of the post-referendum blues and the July heatwave put picnics and barbecues high on the agenda.
Fashion sales improved markedly as “some sunshine prompted consumers to supplement their summer wardrobes,” it continued.
And in August, the BRC attributed slowing sales in non-food categories to warm weather and specifically in fashion where “the warmer weather made it almost too hot to shop” and dissuaded shoppers from looking at the newly arrived autumn products.
The UK retail sector is of national importance – both economically and socially – which explains the wide media interest in these numbers. There is an understandable urge to get headline numbers and comments out as quickly as possible, but the sector might be better served by taking just a little more time – both in the collection of data and in the analysis of the trends it highlights. That would provide a more balanced and detailed explanation of the background to whatever changes these sales trends might show.
The risk here is pretty clear. Markets, policy makers, retailers and consumers all look to data like this to take the UK’s retail temperature, but we appear to have got stuck in a rut where more considered analysis plays second fiddle in the key press releases to a familiar fall back to the British public’s favourite topic of conversation - and a catchy line for newspaper and website editors.
The latest data is a case in point. The ONS statement makes no reference to weather effects, but the headline in the BBC report zeroes in on how the cold had driven us all out to buy winter clothing. A spokesman for the ONS confirmed that journalists had been separately briefed on this as a rationale for the data.
Now, of course, the weather does play a part in influencing retail sales, but we need more credible explanations provided for these important monthly retail sales numbers. Analysis which just matches retail sales to our weather patterns is failing to provide the sort of actionable insights based on commercial facts which I believe is required. To really help the public understand the UK’s spending patterns and consumer habits perhaps we need to look more closely at the data, and less hopefully at the skies.