28/05/11: Retail sales for April 2011

As promised in the previous post, here's the analysis of retail sales for April 2011.

Headline figures:

• The volume of retail sales (i.e. excluding price effects - which in effect means excluding the revenue factor or margin factor for retail services providers) was down by 3.9% in April 2011 year on year (for the third month in a row).
  
• There was a monthly decrease of 0.8% for the first month after two consecutive months of increases (retail sales volume was up 3.1% in February and 0.8% in March with both increases attributed to the correction on big contractions in December 2010 (-1.5%) and January (-3.4%).
  
• Over the last 6 months, therefore, volume of retail sales was down cumulative 3.07%. since January 2008 the volume of retail sales has fallen total of 20.92%.
• The value of retail sales decreased by 3.5% in April 2011 year on year, marking a third consecutive month of annual decreases.
  
• There was a month-on-month decline of -0.7%. The wedge between value and volume decrease can be interpreted as being driven by inflation, suggesting modest inflation in retail sales sector. The monthly pattern of retail sales value is virtually identical to volume with April decrease coming after two months of moderate increases which compensated for the poor weather (and poor Christmas sales) in December-January.
• Over the last 6 months value of retail sales has declined by 2.56% held above the decline in volume index solely by rising prices. Since January 2008 Irish retail sector activity as measured by value of retail sales (turnover and margins being best reflected by this metric, rather than CSO-preferred volume index) has fallen by a cumulative of 26.1%.

Charts to illustrate:

• Excluding Motor Trades there was an annual decrease of 2.4% in the value of retail sales in April. This was the 34th consecutive month of annual decreases.
  
• Ex-Motors retail sales posted a monthly decrease of 0.3% in April, continuing up-down monthly cycle that started in August 2010.
• Over the last 6 months, value of ex-motor retail sales has increased by 0.1% and since January 2008 the value of core retail sales is down 18.3%.
  
• The data on value suggest that inflation is starting to pick up in core retail sales.
• Ex-Motors volume of retail sales fell a massive 5.0% yoy in April (again, supporting the assertion that the end of sales season saw price increases across core retail sales in 2011 relative to 2010, which means that with lower disposable incomes Irish consumers are now facing rising cost of living once again). This marked 12th consecutive month of volume decreases in annual terms.
  
• Month-on-month core retail sales were down 1.0% in April, after posting zero change in March and contracting 0.3% in February.
• Over the last six months, core retail sales volumes have declined by 2.16% and since January 2008 they are down 14.25%.
  

Charts to illustrate:
Sources of core declines were:

• In terms of volume: Fuel (-11.9), Pharmaceuticals Medical and Cosmetic Articles (-7.4%) and Furniture & Lighting (-16.2%) were among the ten categories that posted year-on-year decreases in the volume of sales in April. Books, newspapers & stationery fell 14.9%, Bars -6.0%, Food, beverages & tobacco were down 5.7%.
  
• In terms of value: largest annual declines were posted in Food, beverages & tobacco (-5.2%), Pharmaceuticals Medical & Cosmetic Articles (-6.2%), Furniture and Lighting (-19%), Electrical Goods (-8.5%), Books, Newspapers and Stationery (-14.4%), and Bars (-4.7%).
• The list of heaviest-hit sub-categories of retail sales in annual terms suggests that these might signal renewed push for shopping in Northern Ireland. In particular, large ticket items and higher cost items might be now more efficiently purchased outside ROI given the strength of the Euro. Another possibility might be continued drive by consumers into on-line sales channels which come from outside Ireland.
  

Lastly, some anecdotal evidence - reports by retail shop owners I had communications with - suggest that May might be another bad month for the sector already virtually decimated by the crisis.