A leading retail analyst has said that the poor UK footfall numbers recorded in May are likely to persist at least until the end of the summer.
Clive Black of Shore Capital was commenting following the publication of the latest BRC-Springboard Footfall and Vacancies Monitor, which showed that UK retail footfall declined by 3.5% in May – a sharp decline on the same month in the previous year (0.4%).
This was the worst monthly footfall figure in six years, the British Retail Consortium reported, with declines in every region and across all channels: high streets, retail parks, and shopping centres.
Challenging Times
Commenting on the data, Black said, “As we seek to look into the future, we would expect June to be an equally challenging month for footfall and wider trade, as the comparative headwind continues to take its toll.
“That hill is expected to last until August, to our minds, when the headwind starts to ease and become a tailwind. October/November 2018 were pretty grim for the UK retail trade,” he added.
Black noted that, despite both BRC-Springboard and Nielsen reporting lower trading activity, this data has yet to impact retailer share prices.
“That said, we have attempted to bake in a challenging Q2 CY2019 into our forecasts for the various stocks, and so the mood music may be a little weaker than financial reality,” he added.
“In recording a weak May, we reiterate our view of more to come in June/July before the easing-off process begins. Meanwhile, wider processes, such as domestic political chaos, weak consumer confidence, the shift from store to online, and the growing preference for services over goods, continue.”
Exploring The Data
According to the BRC-Springboard data, footfall was down 0.7% on a three-month basis, with the six-month and twelve-month averages at -1.3% and -1.4%, respectively.
High-street average footfall was down 4.8% in May, which was a worse performance than retail parks (-0.8%) and shopping centres (-3.6%).
“While consumers stayed away from the shops this May, retailers still had to pay the full cost of business rates, which are levied regardless of whether a store makes a penny at the till,” commented Helen Dickinson, chief executive of the British Retail Consortium.
“These rising costs are making many retailers rethink investment decisions, as well as contributing to store closures up and down the country,” Dickinson added. “The government must act to reform this anachronistic tax system, or it will be the consumers who suffer the shuttered windows at their local shopping locations.”
Brexit Concerns
At the weekend, the BRC reiterated its stance on the challenges that a no-deal Brexit would create, following a recent report from the GMB union indicating that price rises would be likely if the UK crashed out of Europe in October.
“The BRC has consistently made the case that a no-deal Brexit would see the prices of many everyday items rise,” Dickinson commented. “Our own research suggests that currency depreciation, additional documentation checks and requirements, tariffs on some goods, as well as delays at the border, would all contribute to higher prices and a reduced selection.”
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
