Bad news on UK retail footfall as 'store capture rate' drops too

By

Sandra Halliday

Published
Jan 15, 2018

December may be an increasingly-distant (and not always pleasant) memory for the fashion retail sector but we’re still getting plenty of data through to show just why it was so tough for so many.

A number of big names will report Christmas trading this week, but for today we have the monthly footfall figures from tracking specialist Springboard and they don’t look good, backing up a raft of other reports that have been trickling out.

The main point for Springboard is that visitor traffic to stores fell by 3.5% year-on-year in what is still the busiest shopping month of the year. 

That was the biggest drop since March 2013 (when the fall was an even worse 5.2%). And it was also lower than both the three-month rolling average of a 1.9% drop and the 12-month rolling average of minus 0.7%.

All regions showed a drop in footfall for December, the sharpest reductions being seen in Scotland (4.7%), the South West (5.2%) and even Greater London (3.7%) where the tourist boom might have been hoped to boost the numbers. The East also saw an end to its 12-month run of positive growth, declining by 2.6%.

Further underlining the weakness was the fact that no type of retail destination hit positive figures. Retail parks, which have generally been buoyant for most of the year, declined by 0.6%, while the shopping centres that might have been expected to be the big winners from Christmas shopping were actually down 3.8%. And high streets fell 4.6%.

So the question is - why at the busiest time of year did consumers avoid stores?

Earlier surveys gave one clue - the fact that stores were expected to be busy and shoppers didn’t want to face the crowds and the queues. Of course, belt-tightening also has to be taken into account as the combination of higher prices and negligible wage growth have left shoppers needing to re-think some spending plans.

The only positive note is that some of the decline would have been made up for elsewhere, either in physical stores during November due to Black Friday, or online during both November and December as shoppers chose convenience over the in-store experience.

WHY THE SLOWDOWN?

Helen Dickinson, chief executive of the British Retail Consortium, certainly thinks online is a major factor. “The sharp drop in footfall underlines how shopping is being transformed by the shift to online. In the past, shoppers would have exclusively visited physical stores [but] improved delivery options by both purely digital retailers and those with stores and an online offer mean many purchases of last minute gifts are moving online,” she said.

And she added: “The squeeze on discretionary spending also contributed to the decline in footfall. Households had to use their money more carefully, researching products online, rather than heading out to stores to browse.” 

Meanwhile, Diane Wehrle, Springboard’s insight director, said that it was clear early on that even a last-minute race to stores wouldn’t translate into higher footfall in total.

“The drop in footfall of 3.3% in the weeks leading up to Christmas provided a heads-up for December, with the final [drop] of 3.5% of little surprise,” she explained. “This is a significant weakening in performance from December 2016 when footfall in retail destinations dropped by just 0.2%.”

Why did retail parks stay relatively strong compared to the rest of the sector?  “The resilience of retail parks reflects the rise in online activity in December, which drives click-and-collect trips, and the better trading performance of food stores versus non-food retailers,” Wehrle said.

Ominously, she also warned that the “store capture rate” is declining. This is the percentage of people actually entering stores compared to the numbers turning up at a shopping centre, retail park or high street.

“It means that shops are losing footfall more quickly than wider retail locations and so have a declining customer base,” she said. “Moving forward into 2018, it is apparent that retailers need to focus on maximising conversion via the core deliverable of best product and customer service with an improved in-store experience, while holding their nerve and resisting discounting too early and so protecting margin.”

That may be easier said than done. As we’ve  heard from a number of stores, discounts became a necessity quite early. Debenhams was the biggest example of that with the chain being forced into deeper December discounts as it struggled to boost sales. 

However, its rival House of Fraser could offer some hope. Although the under-pressure chain reported lower Christmas sales, it stuck carefully to its plans and kept discounts to a minimum, a strategy that saw it reporting improved margins, despite the sales dip.