The September ONS figures on UK retail sales were released today (18 October) and, as always, they make for rather interesting reading.
With retail playing such an integral role in the country’s economy, we find that it’s best to look at the macro trends rather than focusing on the the short-term. This allows us to best assess the impact of transformation projects that the market leaders are delivering, without the noise of monthly volatility.
So, Peak’s key observation is that the sector has enjoyed a 3% year-on-year growth in sales - and that there’s further growth on the horizon.
The retailers driving this growth have one thing in common - they’re the ones who are leveraging their data to full effect, using artificial intelligence to double down on opportunities for improving customer experience and supply chain efficiencies.
You don’t have to look much further than e-commerce giants ASOS for an example of this, with the fashion retailer reporting a huge 28% increase in profits only yesterday (17 October). Other businesses, such as Wren Kitchens, for example, are also going from strength to strength thanks to AI, with our recent proprietary research on the retail sector identifying them as one of the top ten UK businesses in terms of growth.
These kind of businesses are showing incredible resilience to the wider challenges - the doom and gloom - associated with the retail sector over the last 18 months. They have realised the opportunity that e-commerce holds, and have proved that a long-term investment in technology and their ability leverage their data effectively will increase their competitiveness. Those who have not made these decisions have been revealed - just take a look at House of Fraser, Toys R Us et al. As Warren Buffett put it, “‘only when the tide goes out do you discover who's been swimming naked.”
Last month, we suggested that August’s retail statistics signalled the start of a swing to online, and it’s obvious from today’s figures that e-commerce is continuing to drive the sector’s growth. In September, internet sales increased by 11% for the amount spent compared to the same month last year, with all sectors - from food and household to clothing and textiles - enjoying strong signs of growth.
Despite what you might read elsewhere, the future of retail is in fact rather bright - and today’s figures, for us, only further reaffirm this point.