Retail spending remains healthy a month before the festive peak

November saw growth of 0.2% (month-on-month) in retail sales volumes. In the three months leading up to October volumes were up 2.1%. This is the biggest increase since Q4 (October, November and December) 2014.

When looking at which areas of retail are leading the increase, it is evident that department stores continue to outperform most other store types, whereas the performance of clothing and footwear lag behind. Household stores saw a big increase in sales volumes in November, but this was most likely spurred by black Friday sales – especially seeing an increase in the sales of electrical goods during this period.

It is evident from the growth in retail sales that people are willing to spend. But will this continue? Economic forecasts suggest that the outlook from now is set to become more challenging for retailers. With the latest labour market data showing the first quarterly fall in employment in over a year, and inflation increasing to 1.2% in November, from 0.9% in October, real disposable income gains are expected to moderate substantially, and retail sales growth is predicted to ease as a result.

It is important for any organisation to consider the impact of economic and social factors on customers. Not just on channel preferences to make purchases, but on customer appetite to do so. In tandem, understanding future circumstances and changes can help support better operational forecasts but also enable appropriate modelling to be applied for credit risk – such as a view of forward looking affordability.

In addition to this, looking at demographic modelling of individuals will provide better insight into which customer groups or individuals are likely to do what.

Having a forward looking view can help you pre-empt growth in sales – strategically. Contact James Ison for more information or detail on the latest forecasts.