Disappointing news for retailers

Squeeze on Shoppers Continues into May, state Synovate Retail Performance

INTERNATIONAL NEWS

Synovate - Jun 15th 2011, 14:38

The latest footfall data from Synovate Retail Performance post further disappointing news for retailers. The UK Retail Traffic Index (RTI), the national indicator of non-grocery store footfall, shows that shopper numbers fell by 4.0% in May against the same month of 2010. Against April, there was a 3.4% decline. 

“There had been hope that April’s sun, extended holidays and royal wedding celebrations might act as a catalyst for change in the consumer economy,” comments Dr Tim Denison, Director of Retail Intelligence at Synovate Retail Performance. “Though these events were enough to lift consumer confidence in May, they were insufficient to induce a bounce in either retail footfall or sales. Higher spirits alone could not dislodge the squeeze on living standards that people are currently experiencing.”

“Inflation at 4.5% is impacting everyone and hurting those in particular whose wages are failing to keep pace. Petrol prices are an everyday reminder of the higher bills we face and households are making adjustments to their lifestyles and shopping patterns. Fewer, shorter forays are replacing the regular, mass expeditions to the shops. Value is starting to vanquish volume,” says Denison.

“Most retailers and analysts accepted that the first quarter of the year would be slow, on the back of the introduction of the Government’s austerity measures. Rising inflation, though, is exactly what retailers didn’t want to see following on behind in quarter two, hitting both their supply costs and consumer demand. Unsold stock levels are now reported to be at their highest point since 1984. To meet this latest challenge, retailers need to act quickly and decisively, by pricing sensitively and launching summer Sales earlier. These steps alone, however, will not be sufficient,” warns Denison.

“We desperately need to see an injection of new ideas and enterprise in the mid-year campaigns if they are going to get the nation shopping again. Window-to-window posters declaring 70% or more reductions on specified lines are simply not going to be compelling enough reason to persuade anonymous, passing shoppers into stores under current conditions. Modern day retailers owe it to themselves and their customers to be better than this. A multi-channel approach, harnessing the value of customer databases and social media in providing tailored communications and dialogue, presents one such opportunity, but one of many.

“There are early signs that market conditions in the UK will improve as we move into 2012, but there are at least another six months of tough trading before then, with the second half of 2011 looking just as testing as the first. Retailers have shown their skills in reducing their overheads and direct costs through

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efficiency programmes and cost management initiatives, and in this regard there is little more that they can do. The focus has moved towards margin protection and preservation. In my mind, at least, though, the most threatening front over the next six months will be the level of demand,” concludes Denison. “Leading retailers are currently reviewing how they can optimise both their level of engagement with and relevance to their customers going forward, in order to harness and stimulate demand. In this respect, truly understanding shopper behaviour combined with tracking store footfall and conversion rates has never been more valuable to them.”