Nick Bubb's verdict: Which retail sales figures should we believe?

It is often said that the much-maligned Office of National Statistics lives on a different planet, as its Retail Sales figures are notoriously unreliable. But down in Newport in South Wales is the ONS starting to get its act together?

We all want to know how well retailers are doing generally, but, alas, there is no one completely accurate measure available. The estimable John Lewis Partnership produces weekly sales figures, but these aren’t the great bellwether that they used to be, because Waitrose and John Lewis department stores are clearly outperforming the market.

The accountants BDO produce a useful weekly High Street Sales Tracker, but this is a non-food only index and the approximately 70 mid-sized chains involved are mainly relatively upscale fashion retailers, so this is really a fashion sales index.

There are, of course, three monthly measures of total retail sales, including food and non-food: the CBI survey, the BRC survey and the ONS figures.

The survey that comes out first is beloved by economists and that’s the CBI’s, which does have a good record over time of tracking the ups and downs of the official retail sales figures.

But it is not a quantitative survey. It simply measures the percentage balance between those CBI members who think that volume is up less those who think volume is down, and so is little more than a snapshot of mid-month retail sentiment. 

The great thing about the BRC Retail Sales Monitor is that it is based on real figures, which are unadjusted and unrevised.

As well as receiving sales information from its members, the BRC also receives food and drink sales data from the IGD and these are aggregated by the accountants KPMG, with a gross sales and like-for-like measure, split between food and non-food.

The problem with the BRC figures is that they are only for the big retailers who are members of the BRC ( they don’t include small independents, etc) and the BRC is an industry lobby, so it is prone to whine about how bad life is for retailers in order to influence Government policy.

So what of the “official” retail sales figures? In theory, these are more comprehensive than any other measure, as the ONS’s monthly survey of 5,000 businesses includes the 900 largest retailers and a representative panel of smaller businesses.

The ONS focuses, irritatingly, on “seasonally adjusted sales volume”, but it also produces detailed sub-sector breakdowns on sales value, non-seasonally adjusted, so these are the ones to focus on.

The glaring problem with the ONS figures is that they are based on samples of figures, depending on how many retailers have returned the monthly forms.

In October, the response rate, not untypically, was only 62% of the forms, although these retailers presented 88% of the total turnover. The reason why the ONS monthly figures are often rather flaky is that the ONS makes estimates for the retailers who haven’t returned their forms (the smaller retailers) and then adjusts the overall figures subsequently for “late returns”. The fact that these adjustments always seems to be downward reflects the old adage that bad news comes late.

And yet… last month the BRC made a point of noting that the 3.4% increase in ONS retail sales for September exactly mirrored the 3.4% gross increase  in the BRC’s survey for September.

That tribute from the BRC was certainly a feather in the ONS’s rather bedraggled hat, although the point was diminished by the fact that today the ONS has revised down September’s increase from 3.4% to 3.2%.

Confidence in the overall ONS retail sales trends is also reduced as soon as you start to dig into the sub-sector breakdowns, as anybody who thinks that carpet retailers’ sales have been growing at 30% in recent months is clearly living on a different planet.

However, the big discrepancies earlier in the year between large and small businesses in the ONS monthly series has been cleared up, so it may be that the underpaid and overworked civil servants in Newport are starting to deliver on the ONS’s stated vision to be “where people come first for trusted statistics”.