18th December 2014
UK retail sales rocketed during November, rising to their best level in more than a decade as a result Black Friday’s shopping frenzy.
Volumes jumped 1.6% month-on-month, following a robust 1% in October, up from a drop of 0.3% in September. As a result of the month’s retail run, year-on-year growth hit 6.4%, marking the strongest gain since May 2004.
Howard Archer, chief UK and European economist at IHS Insight said: “Retail sales were clearly boosted substantially by consumers taking advantage of many retailers offering major discounts and promotions on Black Friday (28 November). The extent of the offers made by retailers was highlighted by the retail sales deflator being down a record 2% year-on-year in November.”
However a key question for retailers now will be to what extent did the strong sales on pull forward activity from December.
“In the wider context of the economy, the strength of retail sales in November gives a serious lift to GDP growth prospects in the fourth quarter and increases the chances that it could at least match the 0.7% quarter-on-quarter rate seen in the third quarter,” added Archer
But Archer also highlighted that retailers will be all too aware that many consumers have suffered an extended squeeze on their purchasing power due to prolonged low earnings growth and this is likely to keep them on their toes on the promotions front and active right up to Christmas Eve as well as in the post-Christmas clearance sales.
He said: “The surge in retail sales on Black Friday certainly pointed to a strong desire of consumers to seek out bargains this Christmas, which suggests that many people will hold back on much of their Christmas shopping as long as they can in the hope that a significant number of retailers will engage in last minute major promotions and sales to drum up final Christmas sales. Indeed, John Lewis has commented that ‘following the trend we saw last year, many shoppers are clearly leaving their gift buying to the last minute’.”
Overall Archer believes the fundamentals for consumer spending have improved recently and are “looking healthy for this Christmas and, increasingly, for 2015”.