Essential reading for retailers and suppliers in the home improvement market

Shoppers stay home in October but watch and wait for deals

Published: 12 November 2018 - Fiona Garcia
 

Continued declines in footfall reflect ongoing struggles for retailers but also suggest consumers are holding out for discounts before visiting shops, as Black Friday and other sales loom.

Footfall in October fell by 2% on the previous year; an identical fall to that recorded in October 2017 and a deeper decline than September 2018, when footfall fell by 1.7%.

Whilst the figures reflect the continued downward trend in footfall, with October marking the 11th month of consecutive decline, experts believes there are signs that consumers are waiting for Black Friday and seasonal discounts before visiting shops.

A similar trend has been observed in retail sales figures, with the BRC KPMG Retail Sales Monitor reporting that like-for-like sales were up just 0.1% in October against a figure that had already declined 1% on the previous year. KPMG UK head of retail Paul Martin said: “Demand was mainly dampened by continued economic uncertainty, as well as the anticipation for the deep discounting ahead – especially now that Black Friday weekend has become such a permanent feature.”

High Street footfall fell by 2.3% in October, representing three months of consecutive weakening for this particular shopping location. Northern Ireland and Greater London were the only two regions to see growth, whilst the decline in the South East saw a significant acceleration from 0.6% to 5% in this location; the deepest fall since April 2018, when it dropped by 6.2%.

The East and East Midlands experienced the deepest overall decline in footfall of 6.1% and 4.8%, respectively.

As part of Springboard’s weekly footfall benchmark, almost half of retailers said this month that they thought more consumers are simply window shopping at the moment, with fewer buying in store compared with the previous month. The survey of more than 2,000 retailers saw 23.2% strongly agree and 25.9% agree with the statement. However, opinion was split, as 26.8% disagreed and 24.1% strongly disagreed.

Springboard marketing and insights director Diane Wehrle said: “If further evidence of the veracity of footfall as an indicator of retail trading performance were required then it is provided by October's result of -2%. Not only does it reflect the ongoing challenges that the retail sector is facing but, as importantly, with the decline becoming larger in every month since June, it is illustrating that the challenges for retailers have been increasing as we moved through the year. The rate of decline in October was a fifth greater than the -1.7% drop in September demonstrating that consumer demand is continuing to weaken which, as we head into the key trading period of the year, suggests that Christmas could be challenging.”

 

Regionally, there were success stories: Northern Ireland was the only area to record growth of 2.7%, with footfall growing by 4% in both its high streets and retail parks; an improvement from September’s sharp declines of 6.1% in both of these locations. This may have been helped by the region’s town centre vacancy rate which, despite sitting above the UK average of 9.6%, recorded the highest improvement dropping from 14.4% in July to 13.6% in October.

Greater London also saw growth on the high street during the month, with footfall up 0.2% in the shopping location, despite having increased its vacancy rate by a whole percentage point from 4% in July to 5% in October; though it remains the region with the lowest vacancy rate in the UK. Meanwhile, Wales saw a deceleration in footfall decline, from -5.5% recorded in September to -2.3% in October. Again, this is despite recording a town centre vacancy rate of 13.6% for the month.  

Ms Werhle added: “While the UK vacancy rate has risen marginally to 9.6% from 9.2% in the last quarter, it still remains below 10%, as it has done in all but one quarter since July 2015. This is further evidence that the offer in bricks-and-mortar destinations is shifting to better accommodate continued consumer demand for experience-led visits. The catalyst was the growth in demand for hospitality and, while this is continuing despite the fact that the growth in eating out visits has slowed since the heady days of 2015, it has opened up opportunities for the introduction of more diverse experience and leisure led propositions in destinations that ultimately may well broaden the definition of retail.”

Internet retailers have also been affected, with UK online retail sales up just 7.5% YOY in September – the lowest September growth since 2014 - as shoppers were being sensible after summer spending and holding out for Black Friday deals.

This is despite a marked increase in promotions and discounts seen online – particularly within the home improvement sector.

IMRG strategy and insight director Andy Mulcahy said: “Meanwhile, several retailers have spoken publicly about the scale of discounting that has been active across various retail sites, meaning that the industry is already heavily involved in discounting before we even get near to Black Friday. The conversion rate was markedly down in September; could it possibly be that people are already browsing for ideas, in the knowledge that Black Friday will inevitably bring heavier discounts?”

 

 

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