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2016 footfall in review

High Street Retail

2016 had a lot to live up to. Store footfall in 2015 had risen for the first time in 8 years, despite a weak Quarter 4, signalling that retailers may have reached a landmark point – the ability to drive more traffic into stores as well as to their websites.

This brief review charts how the fortunes of store footfall in the UK progressed over the year.

After a subdued 2015 Christmas, the new year began with a flourish. Shoppers hit the high streets hard in early January to secure winter Sale bargains. They could afford to: strong employment and high disposable income levels fostered security in their spending. For the first time in 6 months, store footfall increased year-on-year, climbing 1.9% above the level of the same month in 2014. It turned out to be the only month of 2016 in which this occurred. Though retail sales continued to flourish in February, footfall levels reflected growing restraint, falling by 1.3% year-on-year, with weakening consumer confidence, a jittery pound and the Brexit debate underway.

It was followed by an early Easter in March, with 2.9% fewer shoppers out and about over the bank holiday weekend compared to the previous year, in line with the 2.8% drop for the month as a whole. It marked the beginning of a tricky six months for non-food retailing. Retail footfall and spend suffered at the hands of the leisure and recreational sectors, as experiences trumped new product purchases. The direction of travel in non-food retailing was categorically downwards.

Quarter Two failed to see the injection in shopper numbers that normally comes in the late Spring, 3.7% fewer shoppers visited stores compared to 2015. Weak demand, reduced margins and higher costs, following the introduction of the National Living Wage in April, created unease and uncertainty in board rooms and caused retailers to sit on their hands over some investment plans. Retail health, as measured by the KPMG/Ipsos Retail Think Tank, declined for the first time in two years. Then came the EU referendum.

British shoppers are nothing but resilient though, and though year-on-year footfall levels disappointed in July and August, down 4%, they were no worse than before the referendum. The events of high summer … the July heatwave, success in Rio, the base rate cut to 0.25%, the Pokémon Go! Phenomenon and the closure of the last BHS stores … appeared not to detract from shoppers’ resolve, who carried on regardless. Demand held up to pre-referendum levels, though discount fed admittedly.

Pushing on into the Autumn, the deficit in shopper numbers against 2015 levels, closed discernibly. In September and October the gap in store footfall narrowed to -1.6% and -1.9% respectively. The nation’s economic fundamentals remained strong, with two consecutive years of real wage growth, and despite the dramatic devaluation in sterling, high street prices remained unaffected.

Black Friday caused the most significant disruption to store footfall in 2016. High expectations of unbeatable offers led people to postpone their shopping trips in the first fortnight of the month and improved online logistics encouraged many more to shop for their bargains on-line rather than to repeat the ugly store scenes of 2014. Though store footfall fell by just 0.7% on the day in question, it suffered a decline of 6.4% over the month of November, something that was not reflected in sales figures.

The quiet November carried on painfully deep into December from which footfall in the month failed to recover. Though the rate of weekly acceleration hit or exceeded expectations in the last 3 weeks of the month, numbers started from a low base. The year ended in new territory, with store footfall at the lowest December levels since the Retail Traffic Index began in 1998, down 9.3% on the year before.

For the year as a whole, store traffic fell by 3.8% over 2015. After the two previous years in which the long term decline in store traffic had stabilised, 2016 saw the return to same annual deficits experienced in the economic downturn over 2009 – 2012.

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