Black Friday fuels UK sales rise
Heavy discounting by online retailers on Black Friday and Cyber Monday fuelled a sharp rise in sales during the second half of November, according to official figures.
Bargain sales of 4K TVs, laptop computers and high end smartphones proved irresistible during the twin discount shopping days ahead of the Christmas season.
The surge in spending on the web, which surprised the City after a succession of doom laden reports by retailers, pushed the quantity of goods bought last month up by 1.4% compared to October. The annual increase hit 3.6%.
City economists were predicting month-on-month growth of just 0.3%, following two months of decline.
The Office for National Statistics said online sales accounted for more than a fifth of spending for the first time in November, with all online retailing accounting for 21.5% of total retailing on a non-seasonally adjusted basis.
It said: “The largest contribution to the monthly growth in November was household goods stores, particularly the strong growth of 11% seen in electrical household appliances. Retailers within this sector suggested that stores took advantage of Black Friday sales, with longer than usual promotions.”
The trend to buy household goods online meant the high street largely missed out on the sales boost, while the determination of Britons to seek out bargains is expected to leave online retailers nursing sharp falls in margins and profits.
Last week Sports Direct boss Mike Ashley complained that retailers had suffered the worst November on record, saying that: “Retailers just cannot take that kind of November. It will literally smash them to pieces.”
Earlier this week online retailer Asos reported sales growth of 15% for the year to August 2019, instead of the 20-25% it had previously pencilled in. Shares in Asos crashed 37.5% to £26.14 , the lowest since September 2015 – wiping more than £1.3bn off the firm’s market value.
Philipp Gutzwiller, head of retail at Lloyds Bank Commercial Banking, said: “These figures show that online is now truly coming of age. Meanwhile, some bricks-and-mortar operations had one of the quietest Novembers in living memory.
“What that means – if anything – for the future of retail remains to be seen. But in the short term, it seems clear that shoppers tightened their belts in the first half of November and, in many cases, are holding their nerve in the hope of ever-sharper discounts – or greater certainty – closer to Christmas.”
The apparent contradiction between the comments made by Ashley and Asos and the buoyant ONS data led some economists to argue that the ONS was struggling to measure Black Friday sales in its seasonally adjusted figures.
Howard Archer, chief economic adviser to the EY Item Club, said: “There are bound to be suspicions about the November data given that the ONS has acknowledged that it is not easy to seasonally-adjust for Black Friday data given the changing nature of promotions.
“Furthermore, the underlying performance of retail sales still looks lacklustre with volumes up a modest 0.4% in the three months to November compared to the three months to August.”
Source: Read Full Article