We have seen today the ONS continue to report positive retail sales numbers relating to volumes and spend.

We have seen today the ONS continue to report positive retail sales numbers relating to volumes and spend. Yet again, we have to question the validity of these statistics. When you dig under the surface, it is clear that many of these signs for optimism are misguided, and by no means an accurate reflection of the difficult reality currently facing UK retailers.

For example, I have sat in many retail boardrooms in my 32 years working in the industry and have never once heard any chief executive ask how many units the business sold last week – or “quantity bought”. Banks are not interested in the volume of coins or notes deposited each week, they are interested in the denomination, and, ultimately, the total cash revenues. And yet the ONS insist on focusing on volumes.

Similarly, we know that disposable income continues to fall, so it is difficult to see how discretionary retail spending can be going up. While the government has been telling us that tax cuts have helped household disposable incomes to rise, it is important to differentiate between “average household disposable income” and “average disposable income per head.” If we look at the number on a like-for-like per head basis, disposable incomes are actually falling by about 2.2%, a less than rosy picture.

An increase in the levels of online sales, while high, is also misleading. Rates of returns in online sales can be significant - as high as 40% in women’s fashion - but this has not been recorded in these statistics.

A particularly surprising trend shows that total retail spending has remained steady at around £350bn per year, despite the collapse of mortgage equity release since 2008, of about £55bn per year. So, if levels of unsecured debt are falling, where are consumers getting all their money from? About half of this is spent on the weekly food and grocery shop - we still have to feed our kids, even in a recession - and about half of this is in the discretionary sectors like apparel, entertainment, and electronics.

Current analysis points to the wholesale raiding of savings accounts, which makes sense with interest rates close to zero. But, if we are all raiding our savings accounts to keep buying those new shoes and tablets, there may be well be a knock-on effect felt by retailers when the pot runs dry.

The best thing a retailer can do is to take these optimistic signals with a pinch of salt, and focus on getting the operational side of the business right. Now is not the time to be less vigilant about squeezing costs, nurturing cash flow and retaining the skills of your best people. A clear understanding of what lies ahead is one of the most effective weapons that management can currently have in their armoury. Given this, misleading industry statistics like those we have seen today need to be shielded against. 

Dan Murphy is the managing director at Alvarez & Marsal