UK retail sales are rising steadily! (Yes, really)

UK media are full of stories about a "surprise" increase in retail sales in January. Sales rose 0.9% in the month, following on from a 0.6% increase in December, to stand 4.4% higher than a year ago.

Why exactly are they surprised? The BBC story linked above provides the answer; the Beeb has found an economist who notes that "all the surveys" showed weak sales.  Ah yes, the surveys! When the British Retail Consortium's survey for January came out a while ago, I posted a note here to point out that the BRC had contorted the data to an astonishing degree in order to make a genuinely strong survey look weak. It's disappointing to realise that there are still economists out there who take these benighted surveys seriously.

The official ONS report on the data can be found here, and bears a bit of scrutiny. The data show that for all the doom and gloom out there, retail sales volumes have been edging steadily higher since August 2011, after a lengthy period of stagnation.  Here's a quote from the report:  "The index levels of the volume and value series between October 2009 and January 2012......show that the volume series has remained broadly flat until around August 2011 and then shows a modest increase whereas the value series continues to increase at a much faster pace throughout the period shown. This implies that the increase in the value series is largely driven by an increase in prices rather than an increase in the amount bought".    That last sentence is interesting because the retailers themselves constantly claim that it's only price discounting that's keeping sales moving -- Sir Philip Green was on TV just now saying exactly that -- but the official data suggest that's not actually true.

Another interesting stat from the report is that internet sales now make up 12% of the total. The flipside of this is a continuing decline in the role of the traditional High Street shop. Across the UK, 14.2% of stores are vacant.  Categories such as bookshops and electrical good retailers, which are particularly affected by online competition, are being replaced by charity shops and "pound stores". This trend is even apparent in my own smugly comfortable commuter town;  the overall store vacancy rate is the lowest in the UK, at 8.2%, but we now have two pound stores side-by-each in the main shopping street, and two Oxfam stores.

The trend towards internet shopping is probably irreversible, but that doesn't mean there's nothing that can be done. There was an interesting story on the TV last month of a businessman in the Hampshire town of Gosport. He had bought up a series of shops in the main street,  one of which had been vacant for many years, and re-let them at half the rental rate demanded by the town's traditional landlords. He has a zero vacancy rate and his tenants are making money. There must be a lesson there somewhere.