New footfall dip is further evidence of UK retail woes, London suffers most
The bad news continues for the UK retail sector. Just a day after the BRC reported lower fashion sales in February, Ipsos Retail Performance said that last month its Retail Traffic Index (RTI) showed a massive 12.5% footfall drop compared to January.
The Index, which tracks footfall to over 4,000 non-food stores, saw its biggest month-on-month fall in shopper traffic since the same two months of 2004.
The drop was less pronounced year-on-year but it was still too big for comfort with a fall of 6.5%.
And every region of the UK suffered falls, the first time this has happened since September last year. While the North of England saw the biggest drop in year-on-year footfall (down 8.9% compared to February 2016), month-on-month, South East England and London recorded the largest drop, down 16.2%.
Ipsos Retail Performance gave no reason for this but Chinese New Year’s calendar shift could have had some impact. This year’s date (January 28) would have seen some Chinese shoppers still spending in London in early February. But with the event being on February 8 last year, the entire Chinese New Year spend would have been in that month.
“For what is often considered the most depressing month of the year, these footfall figures will do very little to raise the spirits of retailers”, said Dr Tim Denison, director of retail intelligence at Ipsos Retail Performance.
“Throughout 2016 the economy was strengthened by consumer spending, the question on every retailer’s lips should be how long this continues to be the GDP’s mainstay. Rising inflation… in tandem with static wage growth will at some point no doubt hit retail sales and footfall.”
In fact, it seems it could already be hitting sales. Earlier this week, we saw data that showed a slowdown in spending on non-essentials such as fashion, which means we cannot simply say that the slack is being taken up by consumers shifting their spending online. That move is certainly happening but does not appear to be enough to make up for declining footfall across the country.
However, Dr Denison also said that we should wait to form conclusions as the fluctuations in footfall make it hard to call time on the UK consumer boom just yet.
“Consumers are still spending money at the tills, except people may be dipping into their savings and extending credit to fund their existing lifestyles, so we shouldn’t expect sales to fall of a cliff in the imminent future” he said. “Footfall figures are oscillating month-on-month, and it is difficult to conclude any underlying trend of where it is headed – until this is determined we should not jump to any drastic conclusions.
“It’s likely that the knock on effect of a slowing economy will trickle down to the shop tills in a transient way, and is unlikely to manifest itself until the second half of the year.”
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