Retail Footfall Holding Firm Following Brexit Vote

UK retail footfall figures for August show that two months on from the Brexit referendum, the unexpected result has had little material impact on how people are going about their day-to-day lives.

Often seen as an insignificant month in the retail calendar, this year August has been anything but, with a base rate cut, the usual ‘Back-to-School’ campaigns, an all-consuming Pokémon Go phenomenon, Team GB’s spectacular success at the Rio Olympics and the end of an era as BHS pulled down its store shutters for the final time.

Despite the perception, August is actually the third busiest month of the year, behind December and July in weekly footfall terms so it’s an important one for retailers to keep the tills ringing.

In August, footfall entering non-food stores in the UK fell by 4.0% compared to August 2015, according to the Retail Traffic Index published by Ipsos Retail Performance, matching the year-on-year gap in July, despite predictions for it to narrow. Two months prior to the vote, retailers recorded a year-on-year deficit of -3.3%. The lack of any discernible impact on store footfall is evident, despite consumer confidence levels falling and consumer concerns about the future state of the economy rising.

Dr Tim Denison, director of retail intelligence at Ipsos Retail Performance, said: “We hadn’t anticipated any discernible effect of the outcome on store footfall until at least 6 months out and this is proving to be the case. We attribute the slight deterioration in store footfall to an underlying softening in demand.”

Footfall in August fell -5.3% compared to July, worse than the 5-year trend of -2.6% but slightly better than in 2015, when it fell by -5.4%.

Whilst the success of Team GB in Brazil injected some much-needed life into the grocery sector, the ‘feel good’ lift was not demonstrable in the non-food sector. The Bank Holiday weekend also proved to be disappointing for retailers, with footfall in non-food stores over the three days down -12.6% on last year.

Dr Denison added: “Footfall was never likely to be stronger than last year, as some had predicted, but the size of the gap is unexpected, but not inexplicable.

“Many people took advantage of the long weekend to go enjoy leisure pursuits, rather than stay at home. Store footfall levels in coastal resorts and transport nodes benefitted, but elsewhere it was a disappointing end to the month.”

Around the regions, the outlook was very similar to July. For the fourth time in five months, the North of England suffered the worst year-on-year decline with a deficit of -6.1% on August 2015. The Midlands saw the best result, with store footfall dropping by only -1.7% on last year.

Dr Denison continued: “August was a bit of a ‘ground hog’ month on all accounts, but we don’t anticipate that remaining the case in September. Conjecture will start to build on when retailers will begin raising prices and that may encourage some extra spending in the coming month. Speculation will also kick off on how retailers will play out Black Friday and that could equally put the brakes on some spending in September. It’s an important month ahead for retailing and it will be fascinating to see in which direction demand turns.”

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