Retail gloom in June

By: Jeff James

Listed Under: Top Story

Published: Wednesday, July 02, 2008

Visitors to out-of-town shopping developments fell 5.8 per cent in June, making these destinations the biggest casualty of Experian's National Retail FootFall Index for June. Overall the index fell by 2.6, the fifth monthly drop this year, while town centre visitor numbers fell 1.5 per cent.

"The reduction in visits to out-of-town centres is having a significant impact on retail sales because these visits have a much better conversion to sales ratio and generate much higher value purchases for retailers," says Jonathan de Mello, Experian's director of retail consultancy. "People generally drive to out-of-town destinations with a specific large purchase in mind and there is far less browsing than is the case in town centres."

Retail business failures are also on the rise, according to Experian's latest insolvency figures. There were 282 non-food retail business failures in the last three months, compared with 226 failures in the same period last year. The last 12 months saw a total of 454 non-food retail failures, compared with 393 the previous year. However, the last three months accounted for almost two-thirds of the annual total, suggesting a dramatic acceleration in the rate of retail business bankruptcies.

"The steady drop in footfall contradicts ONS retail sales figures, but is in line with other surveys,” says Matthew Sherwood, senior economist at Experian. “Even the Bank of England is now giving more weight to surveys when assessing the health of the UK consumer. Consumer confidence is currently at an 18-year low and this is having a significant impact on consumer spending. The squeeze on incomes from rising food and fuel prices continues to intensify, house prices are falling and there are signs that the labour market is beginning to turn. Looking forward to next month, we forecast a slowdown in retail activity as consumers continue to hold back on out-of-town visits or making major purchases as they focus their spending on the upcoming summer holiday season.”

“As visits to out-of-town retail destinations decline, there is evidence that many more people are staying at home to shop online,” says Robin Goad, research director at Hitwise, an Experian company. “UK internet traffic to retail websites has increased by 6.5 per cent compared with last year. One of the main growth drivers is the number of people searching for bargains online, with searches for ‘sales’ having reached their highest since Christmas. Another factor encouraging people to shop on their computers from home is the high price of petrol. UK internet searches for ‘petrol prices’ have seen a sharp increase and are currently 13 times higher than at the same time last year.”

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