UK retail sales fall in October as fashion struggles, analysts hopeful for November mini boom

UK retail had a tough time last month — and a tougher time than originally thought for the month before — Office for National Statistics data showed on Friday.

The ONS said that retail sales volumes (that is, the quantity bought) are estimated to have fallen by 0.7% in October compared to September, following a rise of 0.1% in September itself (which was revised down from the 0.3% uplift it had previously reported).

Non-food stores sales volumes fell month on month as retailers reported that Budget uncertainty affected sales.

While year-on-year sales volumes rose by 2.4%, when compared with their pre-Covid level in February 2020, volumes were down by 1.5%.

The ONS called out clothing, textile and footwear stores as a key sector that fell back, following three months of growth. In fact, this was the biggest faller of all sectors with a 3.1% drop volume-wise.

Overall non-food stores’ sales volumes (the total of department, clothing, household and other non-food stores) fell by 1.4% in October, following a rise of 2.3% in September. Retailers across a range of industries suggested that low consumer confidence and, as mentioned, uncertainty around the forthcoming Budget announcement (which took place on 30 October) affected sales.

The ONS also gave figures for online retail, although in this case it looked at value sales rather than volume. Sales dropped 1.2% month on month but rose 5% year on year.

It said online sales fell across all main sectors, the biggest drop being within non-food retailers.

Department stores were down more than 5% and clothing more than 3%. 

Analysts: cautious but hopeful

So what did analysts think of all this? There seems to be a general mood of caution over what could turn out to be a weak final quarter of 2024, but a recognition that some pent-up spending could be released this month and next.

Samantha Phillips, partner at McKinsey & Company, said: “The figures may reflect lower levels of consumer confidence leading up to the Budget announcement towards the end of the month, offsetting the potential of October half-term, Diwali and Halloween celebrations. It may also be a sign that shoppers are holding out for Black Friday bargains and delaying purchases in the hopes of benefiting from festive discounts. 

“A warmer than average October likely led consumers to postpone the purchase of seasonal items like jumpers, coats and scarves. For many retailers, it will be a disappointing start to the golden quarter. And it will be interesting to see how much consumers rely on November shopping versus the end of the year. The focus will be shifting to how to build momentum going into the most important shopping events in the year. Our research shows six in 10 brands increased their e-commerce spending for Black Friday, Cyber Monday and the end-of-year shopping season. Achieving success during this period and winning discretionary spend from loyal and new customers, will rely on retailers having sufficient inventory, resources and smart pricing and promotions prepared.” 

Meanwhile, Lisa Hooker, leader of industry for consumer markets at PwC UK, added: “It’s clear that falling consumer sentiment and uncertainty ahead of the Budget at the end of last month put a dampener on shoppers’ plans, with unfortunate timing at the start of retail’s critical golden quarter. With shoppers also telling us that they had started their Christmas shopping early, this does not bode well for the upcoming festive season.

“However, what gives us confidence that there could be light at the end of the tunnel is that with no major overnight personal tax rises the Budget largely did not affect consumer spending power in the short term. Moreover, our most recent survey at the start of November found that shoppers were planning to spend almost 40% more than last year over the Black Friday sales period. According to PwC estimates, that would represent a further £2 billion boost in Black Friday spending in 2024 compared with 2023.”

And Oliver Vernon-Harcourt, head of retail at Deloitte, said: “With Black Friday on the horizon, and Christmas trade having started earlier than last year, there is some optimism that November’s sales will improve, particularly if bonfire night socialising provides an additional spark of spending. While sales of big ticket items continue to be low, the discounting period may be the much-needed boost for retailers looking to move stock and for those consumers who have been delaying more significant purchases.”