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Retail reacts to October 2022 ONS data: "retailers will need a renewed focus”

Tom Shearsmith
18 November 2022

UK retailers saw a slight recovery in sales last month in the run up to Christmas but they still remain below pre-pandemic levels, according to figures from The Office for National Statistics (ONS).

The ONS said retail sales volumes increased by 0.6% in October, following a 1.5% drop in September, which had been affected by closures linked to the Queen’s funeral.

The new figures reveal sales improved last month in most categories, except for food retail. In recent months, supermarkets highlighted that they are seeing a decline in volumes sold because of increased cost of living and food prices.

It also revealed a stronger performance at clothing stores ahead of Christmas, reporting 2.5% growth in October.

Key experts across the fashion and retail industry reacted to the October 2022 data:

Silvia Rindone, EY UK&I Retail Lead

Silvia Rindone, EY UK&I Retail Lead:

“Although retail sales rose slightly in October, they continued their broad downward trajectory – coming in lower than they were in August – as consumers continued to cut back on discretionary spending on ‘big ticket’ items.

“The unseasonably warm autumn weather meant shoppers may have delayed buying their winter wardrobes, placing further pressure on many retailers and brands already contending with falling consumer confidence. As a result, we are seeing numerous retailers heavily discounting ahead of Black Friday on 25 November. Many will be hoping the start of the 2022 World Cup will offer a much-needed boost, particularly to food store sales which fell by 1% in October.

“Falling consumer confidence is now having a clear impact on retailers’ bottom lines. EY-Parthenon’s latest Profit Warnings analysis for Q3 2022 found that over 40% of FTSE Retailers issued a profit warning in the last 12 months as spiralling costs, supply chain and labour challenges combined with shrinking demand.

“Now, more than ever, retailers need to ensure they have a differentiated pricing strategy in place which secures consumer demand and allows them to pass on price increases to certain customer segments.”

Oliver Vernon-Harcourt, Head of Retail at Deloitte:

“Preparations for both the colder months ahead and the approaching Christmas festivities gave the first boost to retail sales volumes in months, rising by 0.6%. With inflation across essential items such as food and energy hitting new heights, retail sales values rose by 1.8% in October.

“Seasonal weather has seen non-food sales increase slightly by 1.1%, including a 2.5% boost to clothing sales volumes. Retailers will be hoping that this increased appetite to spend can continue as we get closer to Christmas. Many will try to attract thriftier consumers with extended discounting and value lines during Black Friday and beyond.

“Following the Chancellor’s Autumn Statement this week, consumer confidence is likely to weaken further as we move into the ‘Golden Quarter’. With two in three consumers saying they will have less to spend this festive season, and one in ten planning to forgo buying gifts altogether, retailers will need a renewed focus on providing value in a more competitive environment.”

Lynda Petherick, Retail Lead at Accenture:

Lynda Petherick, Retail Lead at Accenture:

“Retailers would have expected to see a drop in consumer spend last month due to the energy price rise. However, it appears households defied expectations by kicking off their Christmas spending even earlier this year.

“Despite Black Friday coming up next week, it’s unlikely that retailers will be in celebration mode as we head into the festive season this year. Rising inflation and the fall in real wages will only be adding to the sense of unease over whether this will be a “golden quarter” after all.

“Removing excess cost to protect margins and driving internal efficiencies will be key. With further price rises expected, businesses may feel like they are already doing all they can in what is likely to be a difficult Christmas trading period.”

Karl Stone, Head of Voyado UK:

“Retail sales numbers have slightly increased from September, potentially due to early Christmas shoppers getting their orders in before the chaos starts. July saw a slight rise in retail sales volume, so we know seasonal changes are when people increase their spending.

"Although the number of optimistic projections has remained relatively small, it is nevertheless important. Retailers should take advantage of these peak consumer attraction opportunities by maximising their promotional activities on Black Friday, Cyber Monday, and during the whole Christmas season.

"In order to draw in new customers and keep their brand identity strong, more upscale merchants must concentrate on prospects for better or more specialised services. Maintaining this growth through thoughtful personalisation of the customer experience also enables the company to collect data for future use. When the macro climate improves, firms that prioritise offering excellent customer experiences will reap the rewards first.”

CEO of the British Retail Consortium (BRC) Helen Dickinson OBE poses for a portrait at BRC offices in London Bridge, London, England on February 7, 2019.

Helen Dickinson, CEO of the British Retail Consortium:

“Rising retail sales continue to mask a fall in volumes, as inflation continued to inflict pain on retailers and consumers alike. There were drops in purchases of household electricals, while key goods such as pharmaceuticals and footwear held up slightly better.

“Consumer confidence improved slightly as the political turmoil of recent months began to abate. Retailers are hoping sales will pick up a little as the World Cup and festive season approaches, but there is little chance of them catching up with current double-digit inflation.”

Dr Jackie Mulligan, Government High Streets Task Force expert and ShopAppy Founder:

“A lot of small retailers will be scratching their heads at the fact retail sales rose in October, as it's certainly not what they're experiencing. The quarterly decline is a better reflection of where sales on the high street are at. This is meant to be the golden quarter for retail and for the third year in a row it is going to feel like fool’s gold for small independents.

“Talk of long recessions does nothing to boost consumer confidence and neither does the crippling uncertainty we have experienced over the past few months. While the Autumn Statement provided some much needed rate relief, small independent retailers are still swimming upstream, something made worse by the online giants promoting Black Friday deals like a grinch stealing local shop sales.

“This year, we are calling on employers who care about their local communities to give their staff an extra hour on Black Friday to spend with local shops and markets instead of the global giants. That will be better for wellbeing, local communities and the planet.”

Richard Lim, CEO of Retail Economics:

“Retailers saw a slight glimmer of light with sales bouncing back from the previous month, but it’s what we’d expect at this time of year as the cooler weather encouraged shoppers into buying winter wear which saw an improvement.

“The overall picture remains tough. With inflation running riot, these figures highlight that consumers are having to spend more but are getting less back in return. Retail sales volumes continue to decline sharply on the previous year as consumers are cutting back, delaying and trading down to cheaper alternatives where they can. This is clearly the case in the grocery sector with the fight to value seeing the discounters gain significant market share.

“Interestingly, there’s been a shift back into stores too. The proportion of spending online remains down on levels seen last year and it seems that consumers feel more in control of their budgets in a physical environment, looking for end-of-aisle discounts and keeping a tighter grip on finances.”

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