contd.......

August saw a rise in interest rates that came as no surprise as inflation was above target, the economy was growing at an above trend rate and mortgage lending hit an all time high.  Retail sales for the month grew 2.5% compared to 05 and consumers were pessimistic about economic conditions with sales of larger items often being discount driven as was the trend throughout 2006.  The average weekly value of sales was 4.2% higher then August 05 at £4.7billion.  The traditional end of summer, back to school rush didn’t materialise in August as the retail traffic index dropped 3% against August 05.  During the month the level of credit card spending reached a twelve-year low.

 

Autumn saw the High Street Banks express concerns over the levels of bad debt that were up 27% in the first six months of the year and home repossessions reach their highest level since 2001.

 

Due to the drop in levels of consumer disposable income, people were now changing their spending habits and avoiding the temptation to spend by steering clear of the shops except for buying the essentials.

 

September retail sales were up 2.4% year on year with food sales being the main driver of overall growth.  September saw another drop in footfall as consumer levels dropped by 3.6% year-on-year.  Shopping numbers for October dropped to their lowest level for eight years, down 2.4% on 2005.   Retail sales increased 2.6% compared to Oct 05 when sales were still being affected by the London bombings and declined by 0.2%.  The average weekly value of sales in October was £4.9 billion, 3.9% higher than October 2005.  The rise in the minimum wage during the month further impacted retailer’s profit margins.

 

Talk of the worst Christmas in 25 years for retailers hit the headlines following footfall for November being recorded at a 4.9% decrease against November 2005 and retail sales being up by only 0.5%.  The last week in November for many retailers was seen as the week of reconnoitre, when consumers would walk around the stores gaining inspiration for gifts, however in 2006 this didn’t materialise as footfall for the week commencing 26th November was down 5.1% year-on-year, people instead preferring to do their browsing over the internet.

 

Website sales for 2006 were estimated at around 3-5% of total retail sales that is relatively low; it was however the impact that it had on shopping behaviour that impacted retailers.  Many people now preferred to do their browsing online which heavily impacted footfall figures for the year.

 

Footfall for the month of December looked weak until the week commencing 17th December when the number of people in store was up 0.8% on 2005.  Christmas 2006 was definitely a year in which consumers left their shopping until the last minute.  With many retailers choosing to hold off going into sales until after Christmas, many consumers delayed their final shopping spree until the wholesale bargains materialised – after Christmas Day.  December 27th was the most crowded sales day since 2002 and was 10% busier than Saturday 16th December, the busiest shopping day in the run up to Christmas.  The Retail Traffic Index was down 2.3% against 2005 that was a figure most retailers would have settled for before the start of the festive campaign and not the disaster many retailers had expected.  Sales figures for the month of December were up 2.5%, as was the custom throughout the year big-ticket sales remained discount driven.  The average weekly value of sales in December was £6.7 billion, 4.7% higher than the same period in December 05.

 

The final two quarters of 2006 both recorded footfall levels drop by 3.1% in 2005 that was better than the opening two quarters of 2006.

 

2007 shapes up to be an interesting year for retailers, those with a strong affinity to their customers tastes, needs and lifestyle pressures will continue to attract business however consumer confidence will remain fragile due to many imponderables hanging, The fear of rising interest rates, inflation, job security and the rising prices of housing.  A minor change to either of these conditions would change the whole complexion of the retail environment making the tipping point of turmoil never very far away.

 

 Click here to return to part one

 

NB This report has been compiled by Bangor & Holywood Town Centres Ltd from various research articles.

 www.consumercounting.com, www.brc.org.uk & www.statistics.gov.uk

Its purpose is to inform retail managers & owners to allow comparison with national trends.