The lure of Black Friday sales over November led to a surprise jump in British retail sales last month, as shoppers opened their wallets both in department stores and online.
In its latest monthly health check of the UK’s retail sector, the Office for National Statistics found that sales volumes grew by 1.7 per cent in November from October, more than triple the 0.5 per cent rise forecast by economists. Some £32.2 billion was spent in the retail industry last month. On the year, sales volumes rose from 4.2 per cent to 5 per cent.
The jump in sales was driven by an even bigger 2.5 per cent monthly rise in non-food sales, suggesting Black Friday played a part in the rise with stores reporting strong demand from promotions in late November in the run-up to U.S.-style ‘Black Friday’ promotions, the ONS said.
Both John Lewis and Dixons Carphone said they delivered record sales during the Black Friday weekend last month.
The figures did not include Cyber Monday sales however, which took place on 30 November, when online retailers offer discounts and which will be captured in December’s snapshot of the retail sector.
The latest figures also suggested retailers have been keeping prices low, with average store prices falling 3.3 per cent in November from last year.
Although much of the growth in sales volumes was driven by the heavy discounting from retailers, the amount spent by shoppers was up 1.4 per cent in November compared with October. Economists said sales figures over the past two months suggests the overall economy will end on an upbeat note, with GDP likely to have risen 0.6 per cent in the fourth quarter.
Howard Archer, chief economist at IHS economics, said: “While consumer confidence has come off the peak levels seen around midyear and earnings growth has slowed recently, the fundamentals still look largely healthy for consumers. Purchasing power is still relatively decent, employment is high and rising and the recent renewed fall in petrol prices frees up more money for discretionary spending”
The figures from the ONS also show that the amount spent online continues to grow, accounting for 13.4 per cent of all retail spending, a rise from 12 per cent in November.
“A continued fall in prices as well as promotions in the run up to Christmas have helped to boost the amount shoppers bought in November, both on the high street and online, with the biggest increases coming from department stores and household goods retailers,” said Melanie Richard, ONS head of retail sales.
However, some analysts warned that heavy spending last month may mean consumers brought forward their purchases to November from December, which could cause problems for retailers during the crucial Christmas and New Year trading period.
Keith Richardson, managing director of the retail sector at Lloyds Bank Commercial Banking, said: “Looking ahead, these figures don’t bode well for the crucial Christmas period.
“Consumers haven’t had it so good since last time fuel prices dropped below £1 a litre – which should be the recipe for a bumper year – but they have also learned to be more savvy since then. Shoppers show no sign of giving up their diet of discounts and, while volume of sales might increase, deflationary prices mean sales values may drop this Christmas.”
However, Vicky Redwood, chief UK economist at Capital Economics, said: “Admittedly, this may just mean that consumers have now done all their Christmas shopping and that December’s sales will be weak. But note that strong sales in October and November last year did not prevent a further reasonable increase in December. In addition, “Cyber Monday” will be captured in December’s figures.”
This figures from the ONS are in contrast to other industry surveys of the retail sector. The British Retail Consortium had said overall November spending at its members was up just 0.7 per cent on 2014, the smallest November rise since 2011. Retailers such as H&M said the unseasonably mild weather had weighed on its growth prospects last month, while others cited the Paris terrorist attacks as dampening trade in central London.