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One of the analysts - I think it was the late lamented Richard Ratner, but I may be wrong - used to refer to life on what he called “Planet ONS”, a place where the retail landscape was completely different to here in the UK. I thought of that this morning when I saw the official sales figures for July, which claimed that the volume of sales through food stores fell in the month, while non-food sales were up, and those in “non-specialised stores”, which I can only assume are department stores, soared nearly 10%.
None of that sounds all that right to me, and the sense of the figures being a bit incongruous was only heightened by looking at the latest BRC figures, which claimed that over the three months from May to July, food sales grew at roughly double the rate of non-food. So who’s right? Any of them?
The problem with the ONS figures is that the methodology is so complex that it’s impossible for a mere mortal to get their head around, but sometimes with statistics the process can be so thorough you end up with a picture which is removed from reality. Indeed not that long ago it changed the methodology it used, in what looked like a tacit admission that the figures had previously been inaccurate.
A lot of the retailers I speak to are sceptical about whether any of the indices really give an accurate reflection of the market. Why does it matter? Well the ONS stats are used by policy makers as a barometer of retail spending. But if retailers aren’t confident that they’re accurate, what hope can the government or MPC have of making the right economic decisions based on them?
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Readers' comments (7)
Anonymous | 20-Aug-2010 9:52 am
The ONS numbers are more right than the BRC numbers given the sample of retailers they survey is about ten times as big.
That's all you have to remember - got it?
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Anonymous | 20-Aug-2010 11:32 am
The ONS sample may be larger, but does it really paint a more accurate portrayal of conditions in the retail sector? I think not. Initial estimates of retail sales are subject to numerous revisions. Let's take January 2010 sales (value NSA figures) as an example. Initial estimates of 3.1% growth have consistently been revised downwards every month - their latest release suggesting that growth was actually just 0.6%. A revision of 2.5 percentage points is enough to raise the eyebrows (even Alistair Darling) of any economist or statistician over the robustness of these figures.
Although the BRC sample is smaller, it includes all the major retailers, the figures are never revised and city analysts (and it appears most media outlets) regard this as the benchmark for retail sales (apart from the disgruntled ONS employee that has commented previously).
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Ian Middleton | 20-Aug-2010 11:50 am
You also have to remember that the ONS surveys are generally regarded as an intrusive irritation by most of those who have to complete them under threat of prosecution if they don't. They certainly are by me.
They should be recruiting a broad cross section of respondents and offering incentives to compensate for the time taken to complete these compulsory questionnaires if they want more considered and reliable figures.
The current system really just encourages guesswork and made up numbers just to get the thing off your desk, which may be a clue to the underlying inaccuracy.
Not that I'd ever do anything like that of course. I'm far too conscientious and public spirited.
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John Dooh | 20-Aug-2010 12:24 pm
I think that's a bit harsh on the ONS. They did seem to go through a bad spot about 2 years ago but the numbers they now produce now seem alot better.
Just because the press pick-up the BRC numbers does not mean alot - just the BRC has a good PR team.
Its worth noting that some of the City analysts have started to question the BRC. Note from Numis recently said "we just don't believe that the sector aggregate results demonstrate that trading so far id as poor as the BRC suggests".
Oh and I think it was Nick Bubb who came up with Planet ONS but even he now the numbers are better
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Anonymous | 20-Aug-2010 12:42 pm
By no means do I intend to speak on behalf of Nick Bubb, but I will refer to his latest The Weekly Retailer report (18 Aug) from Arden Partners…..
“The BRC Retail Sales for July (four weeks to 31 July): we think this is the best guide to overall retail sales trends, as the BRC only measures the big multiple chains (who are its members) and its figures are “real” and never revised (unlike the wretched Office for National Statistics monthly sales figures)”.
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Anonymous | 20-Aug-2010 2:26 pm
By no means do I intend to speak on behalf of Nick Bubb, but I will refer to his latest The Weekly Retailer report (18 Aug) from Arden Partners…..
“The BRC Retail Sales for July (four weeks to 31 July): we think this is the best guide to overall retail sales trends, as the BRC only measures the big multiple chains (who are its members) and its figures are “real” and never revised (unlike the wretched Office for National Statistics monthly sales figures)”.
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NICK BUBB | 24-Aug-2010 10:26 am
Yes, it was me who came up with the Planet ONS gibe (thanks John Dooh)! What the ONS seems incapable of doing is allowing for late or missing monthly sales returns from retailers (bad news always comes late…), which is why they over-state things and then have to revise the figures down. For example, two months ago Predominantly Non-Food Retailer’s year-on-year growth in sales value in May was said to be 5.6%, but last month it was revised down to 4.7% and this month it has been revised down further to 4.2%...
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