Member Article

Retail demand and footfall drops before Christmas rush

An uplift in the retail sector during September has been met with a negative blow, after footfall in non-food stores dropped and consumer demand decreased.

An autumnal change in the weather resulted in a slight spike in demand in the last two weeks of September, as consumers went out to buy seasonal products.

October was disappointing, however, as footfall fell by 3% year-on-year for the month, with London suffering the worst figures after 4.4% drops in footfall.Retail think tank, Ipsos and KPMG released their Retail Health Index (RHI) which showed a drop of 1 point to 77 for the third quarter.

Although demand is expected to increased in November and December during the run up to Christmas, experts predicted that the RHI would remain flat over the coming three months.

Further to this, pressure on margins and increased costs may have a negative effect on retail health.

KPMG’s Head of Retail, David McCorquodale for the UK said: “Consumer demand has continued to be very weak and overall the state of retail health continues on a slight downward trajectory.

“Last year, because of the warmer weather, consumers were not out buying autumnal clothing. With the weather this year more in tune with seasonal averages, clothing has been in demand.”

Retailers were warned that consumers would be making more selective buying decisions with their limited disposable incomes.

Trends have shown that customers are becoming increasingly aware of how retailers market and promote goods, and will be more savvy with their shopping habits.

Commenting on the footfall figures for October, Dr Tim Denison, Head of Retail Intelligence at Ipsos Retail Performance said: “Retailers will be hoping that recent improvements in market conditions will hold firm and that the weather does not disrupt shoppers from getting out as it has done in the past two years.

“As for consumers, tough times make people think more, and when they do so they become more conscious and questioning of their behaviour and more will challenge old habits.”

Dr Denison warned that shoppers would be buying “thoughtfully” rather than “reactively” to save money and give a “greater sense of fulfilment.”

Chief Economist UK at Capital Economics, Vicky Redwood commented: “Like for likegrowth over the quarter was just 0.5+ and it’s the same impasse that we had last time.

“Oil prices have gone back up and energy prices are again on the increase, and this will have a direct impact on consumers and retailers.

“If there is one glimmer of hope, it’s that there has been an improvement in the employment situation; incomes are not falling as significantly as they were before, and people do have some more discretionary income from jobs that have been created.”

This was posted in Bdaily's Members' News section by Miranda Dobson .