ONS unveils April retail figures with good weather encouraging consumers onto the High Street

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The Office for National Statistics (ONS) has announced its retail figures for the month of April.

In April 2017, the quantity bought in the retail industry increased by 2.3% compared with March 2017 and by 4.0% compared with April 2016.

The underlying pattern, as measured by the 3 month on 3 month estimate, showed a slight increase in April 2017 following a short period of contraction, increasing by 0.3%.

The ONS added that anecdotal evidence from retailers suggests that good weather contributed to growth.

The increase in average prices slowed slightly in April 2017, falling from 3.3% in March to 3.1% in April.

Close Brothers Retail Finance managing director Alex Marsh commented: “Retailers’ confidence in consumer spending was revived as consumers flocked to the shops over the Easter bank holiday weekend. Our data showed a particular increase in sales in the furniture sector, which was driven by Bank Holiday Monday shopping. Following on from the seasonal trends from March, outdoor activities remain popular with consumers, with motorbike accessories and golfing equipment all on the rise.

“For retailers to continue to thrive and not just survive, they must turn their focus toward big shopping days, ensuring they capitalise on bank holidays. Retailers must not forget to prepare for the long term – with inflation offsetting rises in wages, consumers’ disposable income won’t be able to stretch to buy big ticket items outright. Allowing flexible payments across items online and in stores gives consumers back their spending power in a squeezed economic environment.”

Salmon global head of consultancy and innovation Hugh Fletcher also commented on the statistics, and warned that short term optimism must not lead to complacency.

“The latest ONS figures make for short-term positive reading, as retail sales rebounded by more than expected; retail sales rose by 2.3% compared to the previous month,” he said. “Late Easter sales and the sunny weather contributed to customers’ appetite for shopping, but challenges lie ahead for traditional retailers who are now struggling to drive footfall. The past few months have seen a continued shift towards digital and online services, which undeniably cannot be ignored. Innovation and a focus towards a robust ecommerce strategy, over bricks and mortar stores, is the only way that retailers will be able to keep up alongside evolving customer traits that demand greater convenience and immediacy. As inflation and prices continue to rise this will become all the more apparent in the retail world that is immeasurably competitive and constantly shifting itself.

“What retailers cannot afford to do is sit and wait for their closest competitor to transform. Instead brands must test and trial new technology-driven concepts to appease the customers’ craving for instantaneous services, much like what digitally native organisations Deliveroo, Uber and Amazon offer. Amazon is a prime example of an online retailer that has entirely dominated the retail industry and is now shifting into new markets such as the home with Amazon Echo, grocery with Amazon Fresh and music with its latest live music service. Amazon’s continued retail supremacy is an on-going trend away from brand loyalty in favour of a service loyalty approach. As it diversifies its offering across all industries, ecommerce and traditional retailers will be forced to evolve their business to embrace new, tech-driven ideas such as artificial intelligence, IoT and virtual reality. Retailers looking to combat the dominance of Amazon must turn to technology and innovation sooner or face the reality of poor sales, profit slumps and sluggish growth.”

Accountancy firm Wilkins Kennedy partner and head of retail and wholesale Phil Mullis added: “The figures show an overall increase in sales, but if you take into account the underlying patterns over a three-month-by three-month period, the actual increase is only 1.5% as there was no growth in March.

“Any growth is good news for retailers, but to get a more accurate figure we’d need to look at the sales for May and June to determine whether or not the growth has been sustained.

“A sunny Bank Holiday weekend and the Easter holidays clearly went quite far in helping the rise in sales. Added to that the Easter period last year during March was a bit of a washout.

“Looking forward to next month, there could be a challenge on the horizon as fuel prices are set to rise and that could have an impact on the sales figures. They will either reveal less volume as people have less to spend, or they will reveal an increase in spend as consumers take the hit of inflation hikes.”

 

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