First three months of 2017 sees first quarterly sales decline since 2013, reveals ONS

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The Office for National Statistics (ONS) has announced its Retail Sales Statistics for March 2017, with a month-on-month drop in sales, despite the spike in spending for Mother’s Day.

The three months to March show a decrease of 1.4%, the third consecutive decrease for the underlying ‘three month on three month’ pattern.

The three months to March 2017 (Quarter 1) has also seen the first quarterly decline since 2013 (Quarter 4).

In March 2017, the quantity bought in the retail industry is estimated to have increased by 1.7% compared with March 2016 but decreased by 1.8% compared with February 2017.

With inflation increasingly entering the market, average store prices (including fuel) increased by 3.3% on the year, the largest growth since March 2012.

Online sales (excluding automotive fuel) increased year-on-year by 19.5% and by 0.5% on the month, accounting for approximately 15.5% of all retail spending.

ONS senior statistician Kate Davies said: “Today’s retail sales figures show a decline on the month and on the three months to March, which coincides with Quarter 1 in 2017. This is the first time we’ve seen a quarterly decline since 2013, and it seems to be a consequence of price increases across a whole range of sectors.”

UK accountancy firm Wilkins Kennedy partner and head of retail and wholesale Phil Mullis commented: “Despite a spending increase year on year of around 5.1%, the amount spent actually dropped during March 2017. Even though retail events such as Mother’s Day could lead to expectations of sales increases, it was not enough.

“We also have to bear in mind that, compared to last year, Easter was held a month later – so any sales that were made during March 2016 for Easter would have been put back to April this year, and may be an explanation as to why the figures seem to have dropped.

“The trend is heading downwards overall as retailers are under pressure to keep prices keen for their customers. It will be interesting to see how the recent announcement relating to a snap general election will affect April retail sales, and if there will be an overall impact on customer confidence.”

Salmon global head of consultancy and innovation Hugh Fletcher highlighted the increasing shift towards online noted in the ONS figures.

“The latest ONS figures continue to show the decline in traditional bricks and mortar stores as retailers endured the biggest quarterly fall in seven years during the first three months of the year,” he said. “Not only this but the significant inflation rate rise continues to deter shoppers from spending money; average store prices increased by 3.3% on the year, the largest growth since 2012. UK retailers face the tricky challenge of growing the business and encouraging shoppers to spend money, all the while mitigating the impact of inflation and keeping costs low. With online sales increasing year-on-year by 19.5%, retailers can no longer shun the truth that shoppers crave a more immediate, reliable and digitally driven experience; another study released by the UK Cards Association shows card spending on the internet increased by a quarter in two years (an average spend of £422 million a day online).

“The latter figures clearly show that shopping trends are shifting and UK consumers are increasingly being turned off the high-street in favour of online platforms such as Deliveroo and Amazon which offer the immediacy now required. The rise of e-commerce has been synonymous with new shopping habits, particularly as shoppers gradually turn to the living room couch as a good-enough replacement to purchase goods and services.

“A shift towards a strong digital strategy is the first step in combatting the decline in the high street but retailers must increasingly test and embrace innovative technologies such as artificial intelligence, virtual reality changing rooms and Zero UI (the move away from physical interactions in favour of sound, movement and other senses). These are just a few examples of the latest digital trends that will continue to impact and evolve the industry. As consumers shift online, retailers must too embrace the change in shopping habits and feed consumers’ desire for convenient online shopping or face the dark prospect of poor sales, profit slumps and sluggish growth.”

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