January 06 2007

Sales boost poor high street performance

The number of shoppers in the high street in December was down on 2005 but rose by 34.8% over November's footfall, according to Retail Traffic Index figures from retail research group SPSL. The SPSL figures, based on the number of people entering shops, confirm reports in December that shoppers were starting to shop closer to Christmas - partly because many now prefer to do some of their gift searching and early shopping online in good time for guaranteed deliveries.

Overall, UK in-store footfall for December was down by 2.3% over the 2005 level, marginally better than SPSL's prediction of a year-on-year fall of 2.4%. While we do not have figures for the amount of money that was actually spent in the high street in December, these footfall figures are in contrast to the 50% growth in online spending in December 2006 compared to the same period of 2005 (as predicted by IMRG and previously reported).

Dr Tim Denison, Director of Knowledge Management at SPSL and leading retail psychologist said, "Many of us had anticipated a slow start to the month, on the back of a tough November. This proved to be the case with shopper numbers down by 5.1% year-on-year in the first week of the month.

"Progressively over the last 8 years our data have shown shoppers taking to the streets later and later; partly because they may have been waiting for retailers' nerves to crack, but partly because many now prefer to do some of their gift searching and early shopping on-line in good time for guaranteed deliveries."

SPSL, however, did not expect the slow start to the month and the poor year-on-year comparison to remain true for the whole of December. "Reassuringly, by the end of week 2 the gap in numbers for the month to that point against 2005 had been cut to -4.3%," said Denison. "The 'rush curve' was gathering significant momentum as more and more shoppers started their in-store gift-buying sprees."

The build-up to Christmas never follows a smooth trend, it seems, and this year the wobble for high street retailers came in week 3 - 12 to 15 December, when the gap in the numbers of shoppers against last year began to grow again.

"To their great credit", said Denison, "many retailers had either planned their campaigns exceptionally well or were on the ball enough to react to the situation. Whatever the case, by the end of week 3 advertising and promotional campaigns had stepped up very noticeably, with some stores, particularly in the fashion sector, deciding to go to full Sale". These actions seemingly did the trick - consumers became fully engaged and Saturday 16 December became the busiest day in the run-up to Christmas and kick started a frantic, final full trading week of shopping.

"Though we did not see a record-breaking surge in the weekend before Christmas Day, the extra day's trading this year did secure year-on-year gains of 0.8% in week 4 and the running month's gap against last year fell to 3.%. I expect that most retailers, if offered at the beginning of the month the position they ended up with on Christmas Eve, would have settled for it," he added.

Perhaps the most unexpected part of the December story was left right to the tail end of the month. The last minute crush in the stores on the 23 and 24 December simply failed to materialise, but instead it happened after Christmas. Despite a shorter trading week this year shopper numbers were up by +0.5% in the final week of the month compared to last year. The 27th was the busiest Sale day since 2002 with many stores reporting record figures.

"The reason for this is now obvious; with most retailers choosing to hold off going into Sale before Christmas, many consumers delayed their final shopping spree until the wholesale bargains materialised - after Christmas Day. There was some talk beforehand of shoppers showing signs of retail lethargy this year, but it seems that their appetite for waiting and then pouncing on bargains is insatiable.

"This behaviour could simply be seen as the latest round in the consumer / retailer lion v. wildebeest act played out every year, but it might also suggest something more concerning to retailers - which is that a growing proportion of shoppers are feeling mounting economic pressure and are resisting the most frivolous and impulsive non-Sale spending."

Emma Herrod