Black Friday boosts struggling retailers as sales jump

Strong Black Friday sales helped tills ring in November - a crucial Christmas trading month that Sports Direct tycoon Mike Ashley had described as "the worst in living memory" for the high street.

The Office for National Statistics (ONS) reported sales volumes growing by 1.4% compared to the previous month and by 3.6% on an annual basis.

Economists had been expecting a month-on-month figure of around 0.3% - given some warnings in the retail sector that Black Friday promotions had largely left consumers - anxious about the outcome of Brexit - feeling cold.

The ONS did, however, place a health warning on the contribution from Black Friday, saying the evolution of the promotional period was continuing to put a strain on its seasonal adjustment models.

It reported that much of the growth came from the sale of household goods which were up 5.3% on October - the biggest leap for five years.

Online sales accounted for 20% of total sales for the first time, giving some support to suggestions from the likes of Mr Ashley that town centres were suffering.

ONS head of retail, Rhian Murphy, commented: "Retail growth continued to slow in the three months to November with strong increases in household goods offset by falling spending in department stores and food shops.

"Black Friday boosted sales in November helped by internet promotions with online spending accounting for over 20% of total retail sales for the first time.

"Household goods, department stores and clothes shops all saw a particular boost in their online sales."

Rachel Lund, head of analytics at the British Retail Consortium, said of the findings: "ONS figures suggest, that while large retailers (both online and offline) had a dismal November, Christmas apparently came early for small businesses.

"With (Other OTC: WWTH - news) sales by small retailers growing more than 13% on last year overall and 25% online; there will be cause for more than a few raised eyebrows in the industry".

The figures were released as a report for the government, chaired by retailer Sir John Timpson, recommended financial support for local authorities to transform high streets into community hubs.

The study stated town centres had twice the number of shops that were needed.

A string of big names have fallen victim to a tough 2018 with Toys R Us, Maplin and House of Fraser among those to have collapsed.

Others, including M&S and Debenhams (Frankfurt: D2T.F - news) , have been forced to close under-performing stores while Mothercare (Other OTC: MHCRF - news) and New Look have been among those to seek rescue deals.

Stores have been grappling with, what the industry has described as, a "perfect storm'"of higher wage, rent and business rates costs at a time when shoppers have been tightening their belts.

Many retailers have responded to poor trading by discounting heavily this month to boost sales , according to a report by Deloitte.

However, increased sales are likely to be at the expense of overall profitability because of the weaker margins.

Online outlets have traditionally out-performed the high street so the stock market reacted with alarm this week when ASOS (LSE: ASC.L - news) issued a profit warning .

The delay to the Commons vote on Theresa May's Brexit deal is tipped to be blamed by retail for adding to the uncertainty beyond the crucial festive season - keeping consumers cautious.

It is a source of frustration as separate ONS figures this week showed household spending power being boosted further by falling inflation and higher wage growth.

The retail sales figures helped the Brexit-hit pound claw back some ground against both the dollar and the euro.

Sterling was about a cent up against the US dollar at $1.27 after the data was published.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said of the performance: "It's unsurprising that the official measure of retail sales picked up in November, given the decline in sales in the previous two months and the still-growing tendency of consumers to do more Christmas shopping on Black Friday.

"Note (Stockholm: NOTE.ST - news) that the increase in overall sales was driven partly by a 2.2% month-to-month increase in non-store sales; online retailers usually benefit the most from Black Friday.

"Sales at non-food stores also jumped by 2.2%, while food store sales were flat. Motor fuel sales also jumped by 3.3%, in response to the sharp fall in fuel prices.

"Most of the pick-up in total sales, however, will be revised away in time, when the seasonal adjustment process updates for the new pattern on spending generated by Black Friday."