They may have been less bad than they could have been but no-one will be popping champagne corks following the release of the official September sales figures by the ONS this morning.
The key theme that runs throughout the bulletin this month is inflation.
It’s inflation which is behind the massive difference between the increases in the volume of sales and the value of sales - 0.6% and 5.4% respectively compared to last September. In food - which is where the value growth is really pronounced - the ONS says prices have risen by 6%.
We don’t write about petrol retailing in Retail Week, but here too inflation is having a marked effect on both the retail sales figures and on the consumer mindset. If you think inflation in food is bad, consider this - sales volumes for automotive fuel increased 2.8% year on year, but sales values rose by a whopping 20%, reflecting year on year inflation on 17.8%.
This is beginning to affect consumer behaviour. One of the most interesting stats buried in the ONS note is that small food stores experienced a whopping 9.1% rise in sales volume during the month, while larger stores had a 1.4% decline. This is clearly very bad news for those grocers reliant on a large store model, particularly Asda which doesn’t have much in the way of a smaller-store format and whose core customer is from the more stretched C2DE demographic.
No-one can afford to get carried away with relief that the numbers are less bad than the worst fears, especially as the ONS has an annoying habit of revising its figures downward anyway. With essentials such as fuel and food becoming so much more expensive, they are influencing consumer behaviour, and inevitably will mean people have less disposable income. The terrible results from Argos yesterday shwoed this is particularly an issue for less well off shoppers, who earn less but still have to pay the same prices for petrol and fuel, and it’s not going to change for the better any time soon.
The weak performance by fashion was expected as a result of the oddly warm weather at the end of September, and a fall in entertainment sales will surprise no-one. What was a surprise was a massive fall in DIY sales volumes of 13.9% - possibly people going out in the sunshine rather than doing up their houses - and a pickup in furniture sales, although this is likely to be driven by promotions.
Finally some good news for electrical retailers after the misery of the riots - volumes were up 5.5% with customers buying the latest computers for their children as they returned to school and college. Proof that even when times are tough, people will still spend on the right product.