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October storms take the wind out of the sails of UK high street

High Street

UK retail footfall declined sharply by -9.1% in October, compared to the same period in 2016. Average footfall rose marginally by +0.3% compared to the previous month, but this is well short of the +4-5% growth felt historically between September and October.

Ipsos Retail Performance compiles the Retail Traffic Index (RTI), which is derived from the number of individual shoppers entering over 4,000 non-food retail stores across the UK. The release of the RTI comes on the back of the latest CBI Distributive Trades Survey, which showed the steepest fall in retail sales volumes in eight and a half years.

The RTI indicated that storms Ophelia and Brian played a big part in the reduced traffic on the high street, with stores being noticeably quieter against 2016 in the final two weeks of October. Across the country, half-term week at the end of October was especially disappointing, with footfall down -12.6% on 2016.

Various data sources are beginning to show a slowdown in consumer spending. Entertainment and leisure pursuits have been hit the hardest but retailing is also starting to be impacted, though not as deeply as October’s footfall figures might suggest.

“We expect to see signs of recovery in November’s figures, as the stark deficit this month is not simply down to the weekend storms, but is also symptomatic of shoppers holding back in anticipation of early launches of Black Friday offers,” commented Dr Tim Denison, director of retail intelligence at Ipsos Retail Performance.

“Retailers will not welcome this decline in store footfall, but they should treat the size of the downturn as a blip in this year’s figures. The interest rate rise is likely to encourage consumers to make the most of the Black Friday offers, pulling forward some of their Christmas shopping into November – although online and mobile will be the main benefactors of this.

“The rise in interest rates is something that many consumers will not have experienced in their adulthood, so any reaction in terms of spending less and saving more is likely to be slow.”

The RTI is expected to return to month-on-month growth in November, with footfall levels predicted to rise +1.7% over October and also close the gap compared to November 2016 to -2.9%.

Dr Denison continued:

“The UK high street is going through the wringer just now, and the last thing retailers need now is for ongoing demand to soften significantly.

“Uncertainty over a Brexit trade deal, and the knock-on effect it will have on import logistics will play heavy on the future plans for retailers. There is also ongoing investment required to transform businesses into seamless omni-channel operations, and the continued quest for higher productivity and efficiency – investment that retailers will be reluctant to commit to when consumer demand is weakening.

“Any steps that can be taken by the Chancellor in the forthcoming budget that will improve the investment climate would no doubt be welcomed by retailers.”

How did footfall compare in September? Read the RTI figures here

The Retail Traffic Index benchmarks against sector and competitor footfall trends. Learn more about the RTI here

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