Consumers rein back non-essential spending
The ongoing decline in footfall could mark a “sea change” in consumers’ willingness to spend, according to the latest research.
Based on figures in the BRC-Springboard Footfall and Vacancies Monitor for July, one research pointed out that this was the first time since January that footfall fell both during trading hours and into the evening, suggesting that purse strings were also being tightened when it came to leisure trips and casual dining.
The Monitor showed that footfall in July fell by 1.1 per cent. In high streets, footfall declined 2.1 per cent and shopping centres saw falls of 1.3 per cent. However, retail parks bucked the trend seeing growth of 1.7 per cent.
On a regional basis, the East and North-East were the only two regions that saw footfall growth in July.
The East Midlands saw the fastest decline in high-street footfall out of all the regions – down by 4.7 per cent.
Overall, the steepest decline in footfall in July occurred in the South-West and Greater London, which both saw a fall of 2.1 per cent.
Wales showed the first decline in seven months at 0.9 per cent, while Scotland saw further decline from 0.2 per cent in June to a dip of 0.4 per cent in July.
British Retail Consortium chief executive Helen Dickinson said: “Most shopping destinations saw a decline in footfall in July compared with the previous year. Even high streets, which have seen fairly stable growth over recent months, reported a decline. Retail parks were the exception and have fared relatively well since March this year, reflecting in part lower rental costs compared with prime and town-centre locations as well as convenience for shoppers.
“The overall decline in footfall translated into weak sales performance for stores in non-food particularly, which fell further into negative territory as consumers rein back spending on non-essential items.
“The vacancy rate, now at its highest for a year, fails to brighten the picture for what was evidently a challenging month for retailers. Nearly one-in 10 retail shops currently lie vacant and those in some vulnerable communities remain persistently empty, limiting the chances of these places to thrive. What’s more, September’s RPI which is expected to be in the region of four per cent, represents a substantial increase in business rates for retailers in April 2018. So Government’s commitment to switch to CPI indexation should really be brought forward from 2020.”
Diane Wehrle, Springboard marketing and insights director, commented: “July’s results might well mark a sea change in consumers’ willingness to spend, as it was the first time since January that footfall dropped during both retail trading hours and into the evening. Over the past few months the growing importance of the leisure based trip has become a key part of the narrative when talking about retail destinations, but a 0.5 per cent drop in footfall post 5pm in July is the first evidence of a tightening of purse strings on casual dining and leisure trips.
“Declining footfall demonstrates that the fall in non-food sales is due to a reduced number of shoppers, so retailers that maintain their in-store footfall are at a clear advantage. Despite a drop in fashion sales, consumers increased their spending on products for the home and out of town locations are the beneficiaries. July’s 1.7 per cent increase in out of town footfall is the fifth in as many months. These results together with the high level of consumer borrowing and an increase in the vacancy rate to 9.6 per cent from 9.3 per cent in April – the highest it’s been since July last year – suggest that trading conditions could be reaching a tipping point into a period of restraint.”
Gill Holloway, sales director at Insight UK, added: “With the latest figures from the BRC revealing UK shoppers are tightening their belts in light of rising inflation and slow wages, it’s not all doom and gloom for retailers. As we continue to navigate through unchartered waters, with UK businesses operating in an incredibly competitive and often volatile environment, retailers have the opportunity to reinvent themselves.
“In recent years, the relationship between retailer and customer has changed irrevocably. Online natives have been born into a world where they’re able to know exactly who their audience is, how they behave on their website and how they browse between competitors. This means those retailers who can create multichannel experiences by seamlessly linking online and offline will be best positioned to capitalise on the new, digitally driven path to purchase.
“However, in an attempt to keep people physically on the high street with new technologies, retailers need to consider the impact that introducing digital experiences in-store will have on its business. The overriding desire to touch and feel products before purchase cannot – as yet – be addressed properly by the online experience. Indeed, neither can the instant gratification of taking purchases home in a bag on the day. However, the way in which we achieve this is changing. Think of the Argos catalogue selection, check stock, buy now and take home approach. Then overlay it with one-of-everything on display, lots of strategically placed portable devices to select a basket to follow you or even guide you around the store, client experience representatives to provide a personal shopper experience, and an RFID to automatically pick and pack your selections from the stocking facility so shoppers can take them home immediately.”
She concluded: “While marrying the world of online with brick-and-mortar can have its perks, it’s clear that there is still a lot of work to do. As digital transformation is a journey it’s important to remember that retailers are not going to get there overnight.”