UNITED KINGDOM - 5th Dec 2008
November's eagerly awaited Retail Traffic Index (RTI) figures from Synovate Retail Performance (formerly SPSL) show that the number of non-food shopping trips in the UK this November fell by a significant 6.6% compared to November 2007 but, reflecting the somewhat more inevitable ?shopper surge' at the start of Christmas, were up 3.0% on October.
Synovate's Dr Tim Denison, a retail psychologist, said, "These latest figures are further proof that retailing is now suffering the full force of a slowdown and that December is likely to be even more challenging. November's year-on-year drop is the worst percentage decline since June 2006, when Football World Cup supporters abandoned the high street to follow the national game in bars and at home. The region hardest hit of all last month was London and the South East, where retail traffic fell by 9.4% against November 2007. Here in particular, the cataclysmic pressures faced in banking and finance and by the services sector in general are taking their toll on shopping, even despite favourable exchange rates for foreign visitors.
"Failing consumer confidence and concerns over job security seem to be paramount in people's minds in the run-up to Christmas. Welcome relief provided by falling household bills and the cut in VAT do not appear to have given any desired lift so far. In my view, this is shaping up to be a back-to-basics Christmas, reverting to traditional values and a family focus, in stark contrast to any of the past decade. It's likely that many will be seeking a 'comforting Christmas.'
Despite these bleak conditions, there is always something to provide some Christmas cheer for retailers. The third week of November saw a deluge of short term promotions, headed by the 20% discount day by M&S. Synovate Retail Performance calculates that footfall was boosted by over 4% that week, indicating that there is still some scope for retailers to engineer demand.
"Promotions which offer genuine, simple to understand cost-savings to shoppers seem to be delivering the best stimulus this year. My concern though, is that the boost in footfall in that week penalised demand in the following week, indicating how fragile the balance has become," said Denison.
In the final week of November retail traffic levels fell by 7.4% against last year, far worse than the previous week's drop of 4.2%.
Denison said, "This year more than any other I can remember, we are seeing our clients intensively analyse their previous day's trading to establish where they can capitalise on successes and where there is opportunity for improvement in performance. Campaigns are being flexed and tuned daily to respond to new intelligence.
"Though promotions are always the most visible element of any Christmas campaign, 2008 is not just about bargains. This December it strikes me that people are searching for that dim-remembered, romanticised, 'comforting Christmas' of old and that is more about the visceral than the vacuous. Amongst retailers, the winners will not only be those that are in-tune with their customers' Christmas lists and their budgets, but those who succeed in making the in'store experience genuinely nostalgic, comforting, special and pleasurable. That includes doing the basics as well as they are done at other times of the year and having well-informed, well-trained and well-motivated staff where it counts – on the shop floor – and ensuring that queue lengths respect shoppers' time above retailers' operational schedules and wage bills," concluded Denison.