Black Friday helped bolster strong retail sales in the lead-up to Christmas
But the November period was also characterised by heavy discounting for traders.
A BUMP FROM the Black Friday sales blitz helped bolster strong retail sales in November last year.
That’s according to a note from Davy researchers on the back of the Central Statistics Office’s latest retail sales index.
New data from the CSO showed that the volume of retail sales was up 4.3% in November 2016 compared to the same month the year before. After the exclusion of motor sales, which tapered off in the second half of the year, this figure swelled to nearly 5%.
Compared to October 2016, November sales were up 0.9%.
“A recent phenomenon in the November data has been the boost in sales volumes from the marketing around Black Friday,” analyst David McNamara wrote in the Davy note.
Deep discounts
He added that “the period is also marked by heavy discounting”, with CSO data showing that retail prices in November were down 1.2% on October’s figure. They were down 2.5% on November 2015 prices.
A separate analysis from KBC suggested this suggests that “some domestic retailers responded aggressively to increased competitive pressures posed by sterling weakness”.
“The November sales jump may reflect spending brought forward from December,” KBC added in the note.
It said the retail sales numbers “seem to highlight a ‘new normal’ in which Irish consumer spending patterns are increasingly influenced by a combination of aggressive pricing and heavily promoted events”.
The value of monthly sales increased by 1.8% when volatile motor sales are excluded and were up 2.2% on the year before.
The sectors that saw the biggest monthly sales boost were electrical goods, up 17%, and pharmaceutical, medical and cosmetic items, up nearly 8%.
Motor trades saw the biggest decrease, down one percentage point on October 2016. The bars trade also experienced a decline, with monthly sales down 0.9%.
McNamara said: “Early evidence from industry body Retail Ireland suggests that December sales were slightly softer than expectations but still well up on December 2015.”
Davy predicted that consumer spending “should post another robust gain” for the final quarter in 2016 after December’s sales figures are published.
Retail Ireland director Thomas Burke said the CSO figures were encouraging and that the “the growth in retail sales in November is further evidence of the increasing importance of the early festive shopping period to Irish retailers”.
He noted that the deep discounting will “inevitably put pressure on retailer’s margins at year end” as sales volume growth “runs at over two-and-a-half times sales value growth across all major retail categories”.
That said, “December remains the single most important trading month for the sector,” he said, “and it remains to be seen if the sector can realise pre-Christmas forecasts of a 3% growth in sales when compared to Christmas 2015.”
Note: This article was updated to include comments from KBC analysts and Retail Ireland.
