Adobe Data Shows U.K. Retail Sales Drop Following Brexit

Online Pricing Data for August Shows Continued Deflation in the U.K.
and U.S.; Adobe Also Collaborates with U.K.’s Office for National
Statistics (ONS)

SAN JOSE, Calif.–(BUSINESS WIRE)–Adobe (Nasdaq:ADBE) today announced the release of its monthly Digital
Price Index (DPI) for August. For the first time, Adobe released online
sales and pricing data for TVs, computers and groceries in the U.K.
Prices across categories declined and online sales for durable goods
like computers and TVs dropped sharply Year-over-Year (YoY). While
demand in both categories was up in May and June YoY – 33.0 and 28.0
percent respectively – growth in July slowed to 16.0 percent and turned
negative in August with a 10.0 percent YoY decrease in sales, likely due
to Brexit and other factors driving uncertainty in Europe. Demand in the
U.S. in the same categories saw strong growth in July and August with
33.7 and 30.2 percent increases, respectively.

As they did in the U.S., prices in the U.K. continued to decline. The
DPI shows 13.4 and 2.7 percent deflation YoY for computers and groceries
respectively, while TVs saw minor deflation at 0.5 percent YoY.
Additionally, London flights and hotel prices increased slightly and
showed signs of stabilization, but remained much lower than last year.
Following two months of consecutive deflation after the Brexit
referendum, London airfares rose 3.1 percent Month-over-Month (MoM) and
are down by 1.0 percent YoY. Hotel prices in London declined a nominal
0.8 percent MoM, but are down 16.0 percent YoY.

DPI data across specific product categories indicates connected
economies in which prices rise and fall. TVs, computers and other
durable goods saw a 60.0 percent correlation between prices in the U.K.
and U.S. Non-durable goods like groceries, which rely much less on
imports, saw less correlation (20.0 percent) between both countries.
Adobe is collaborating with the Office for National Statistics (ONS) as
part of its effort to develop a global methodology for the DPI.

Adobe leverages machine learning in Adobe Marketing Cloud to surface
economic insights from billions of data points. By tracking seven
dollars and fifty cents out of every ten dollars spent online with the
top 500 U.S. retailers* and over six dollars out of every ten dollars
spent online with the top 100 European retailers,** the DPI is able to
analyze billions of digital transactions. Adobe is the first company to
conduct a digital-centric analysis based on real-time access to
price-paid data and actual quantities sold. Unlike other models, Adobe
Digital Insights leverages the Fisher Ideal Price method, which uses
actual quantities purchased to measure inflation and is recognized by
leading economists as the gold standard for the calculation of
inflation. To produce the August DPI, Adobe analyzed 15 billion U.S.
website visits, 3 billion U.K. website visits and online transactions
for over 2.4 million different products.

“There has been little good, micro-level data on the real economy in the
U.K. to help us understand the impact of the Brexit vote,” said Austan
Goolsbee, professor of economics, The University of Chicago’s Booth
School of Business and former chairman of the Council of Economic
Advisers for President Obama. “The Adobe DPI data suggest that prices
for groceries and electronics did not change significantly. It will be
important to keep monitoring the data in the months ahead.”

“New data sources such as those being used by Adobe provide innovative
ways to understand our increasingly digital economy in real time,” said
Jonathan Athow, deputy national statistician, U.K. Office for National
Statistics. “Many of these opportunities will be realised by bringing
together independent, official statisticians and others in the U.K. and
across the world who are using these new data sources and techniques.”

“We may be seeing early signs of hesitancy in spending on durable goods
in the U.K., whereas spending remains stable for essential goods like
groceries,” said Mickey Mericle, vice president, Marketing and Customer
Insights at Adobe. “It will take time to fully grasp Brexit’s effect on
the economy and as we expand the U.K. data we’re incorporating in the
DPI, we expect to uncover more trends. We are also excited to start
working with government agencies like the ONS to further refine the
methodology and surface more insights.”

U.S. Inflation Data

For electronics, nonprescription drugs, flights and hotels, the U.S. saw
continued deflation MoM. Appliances and furniture saw seasonal increases
MoM – 1.8 percent and 0.2 percent, respectively. This inflation is
likely due to increased demand for back-to-school and upcoming Labor Day
sales. Grocery prices remained stable after five months of consecutive
decline while toys saw price inflation. Pokémon merchandise saw 4.4
percent inflation MoM., after falling 2.9 percent in July. Demand for
Pokémon items increased 227.0 percent YoY since the launch of Pokémon Go
(July 6 through August 31).

Latest U.S. findings include:

  • Groceries: The DPI reports that prices were stagnant MoM for
    groceries after five months of deflation, with a 0.9 percent decrease
    YoY. In July, the DPI saw prices drop 0.8 percent YoY, while the CPI
    reported a 1.6 percent deflation during the same time period. DPI data
    covers 20 to 30 percent of online grocery transactions for
    approximately 195,000 products, and is heavily comprised of groceries
    purchased online picked up in-store.
  • Toys: In August, prices for toys rose 0.3 percent. The DPI
    showed U.S. prices dropped 6.0 percent YoY in July, whereas the CPI
    reported 9.3 percent deflation. Data contains transactions for
    approximately 249,000 products, including toys, games and playground
    equipment.
  • Nonprescription Drugs: Prices for nonprescription drugs
    decreased 0.8 percent MoM. While the CPI reported prices dropped 1.6
    percent YoY in July, the DPI saw inflation of 0.1 percent during the
    same time period. DPI findings are based on transactions of 16,000
    products.
  • Electronics: In August, prices for electronics continued to
    decrease. The DPI reported 0.5 percent deflation MoM and 11.0 percent
    deflation YoY. The CPI, which does not break out electronics overall,
    reported that prices fell 7.7 percent for computers and 20.0 percent
    YoY for TVs in July. For that same time period, the DPI saw 12.8
    percent deflation for computers. TV prices dropped 20.2 percent. Data
    is based on online transactions of one million electronic products.
  • Flights: Domestic airfares decreased 3.4 percent MoM and 6.2
    percent YoY. Internationally, prices dropped significantly between
    July and August at 4.3 percent. Additionally, the DPI shows a 1.2
    percent inflation YoY. Data is based on approximately 370,000 flight
    routes.
  • Hotels: Domestic hotel prices saw 2.1 percent deflation MoM.
    While the CPI reported no change in prices YoY in July, the DPI saw a
    2.2 percent increase during the same time period. Internationally,
    hotels decreased 2.8 percent YoY. Data is based on approximately
    250,000 hotel properties and includes associated fees.

The Adobe Digital Economy Project August report can be found here.

About Adobe

Adobe is changing the world through digital experiences. For more
information, visit www.adobe.com.

*Source: Internet
Retailer’s 2015 Top 500 eGuide

** Source: Internet
Retailer’s 2016 Europe 500

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Contacts

Adobe
Melissa Chanslor, 415-832-5489
chanslor@adobe.com
or
Adobe
Stefan
Offermann, 408-536-4023
sofferma@adobe.com