The latest UK retail sales figures from the ONS (Office for National Statistics) gave the market a boost heading into the weekend as they suggested consumers were in buoyant mood last month.

In value terms, in other words in actual pounds and pence, we spent 10.8% more last month than we did in November 2020, which represents the strongest growth in retail sales since shops reopened in May.

EARLY BIRDS

Part of the jump was because retail sales were quite depressed a year ago, rising just 0.7% on 2019, so the bar was very low.

However, another reason for the sharp rise is shoppers have pulled forward their Christmas shopping by several weeks due to worries over product availability. As the saying used to go, they are buying early to avoid disappointment.

That sets up the prospect of a disappointing December, especially with the arrival of the highly-infectious Omicron variant which will impact footfall in stores and encourage people to shop online.

Knightsbridge department store Harrods has even launched its winter sale today, a week earlier than usual, in the hope of boosting sales.

NON-FOOD SALES SOAR

Food sales were down slightly in November by total value although the comparison was quite tough as they rose 6.5% last year. Also, people tend to leave their food shopping until just before Christmas so we would expect December’s figure to show a decent rebound.

Sales of clothing surged 57% on last year, while sales of footwear and leather goods were up 60%, suggesting it was a good month for high street retailers like JD Sports (JD.), Marks & Spencer (MKS), Next (NXT) and Shoe Zone (SHOE).

Sales of sports equipment, toys and games were up by nearly a quarter, which should have helped firms like Halfords (HFD), the UK’s biggest bike seller, Sports Direct owner Frasers (FRAS) and toy and game sellers Games Workshop (GAW) and WH Smith (SMWH).

Demand for watches and jewellery jumped more than 70% last month, which should benefit Watches of Switzerland (WOG) at the top end of the market and possibly pawnbrokers H&T (HAT:AIM) and Ramsdens (RFX:AIM) at lower price points.

NOTABLE SUB-TRENDS

Shoppers were also out in force in second-hand shops, presumably trying to make their budgets go further given the steep rise in energy prices and rising inflation generally.

Interestingly, online sales – which now account for 15% or 15p of every pound we spend – were down for the second month in a row after posting increases of 40%-plus each month during the final quarter of last year.

Overall, however, total retail sales are up 11.5% on the level of February 2020. Sales of household goods are up 8% on pre-pandemic levels, as more of us spend our days working from home, and sales of DIY products like hardware, paint and glass are up more than 13% as the repair, maintenance and improvement market has boomed, benefitting firms like B&Q and Screwfix owner Kingfisher (KGF), Wickes (WIX) and builders’ merchant Travis Perkins (TPK).

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Issue Date: 17 Dec 2021