Retail footfall figures for June were up 0.2% year-on-year, the first positive performance since January, according to the Experian Retail FootFall Index.
This year’s increase is largely due to suppressed numbers from last year, when shoppers were staying away from the high street in favour of watching the World Cup matches, so in reality the growth is merely catching up with levels of Footfall in 2009, said researchers. June normally sees increased footfall, compared to May, as a result of half term week, summer sales and Father’s Day. The pattern continues this year with month-on-month Index growth of 2.4%, Experian said.
The start of the month saw record breaking temperatures, resulting in parts of the UK being officially declared drought zones and, despite above average rainfall across parts of the country towards the end of June, drought conditions in the Eastern area of England remained. Soaring summer temperatures generally encourage people to spend more time in their gardens or pursuing outdoor leisure activities, said Experian. The great summer weather generates a feel good factor for consumers but leaves retailers feeling less good about revenue declines and any rainfall this month would have come as a welcome relief.
June saw a wave of store closures after retailers announced profit warnings with some going into administration. The timing of this coincides with retailers’ quarterly rent payments, which were due at the end of the month, said Experian. The unfortunate knock-on effect of store closures means job losses and retail landlords losing rent payments. Meanwhile, retailer margins continue to be hit by high promotional trading, it added.
The inflationary squeeze on consumers’ disposable income may be contributing to the lack of spending on the high street, said Experian. While the latest figures show inflation has remained at 4.5%, it may well increase further after announcements of new energy price hikes. The Bank of England is likely to continue to hold interest rates at a record low of 0.5% until late 2011 or 2012, fearing raising the rate will not help the weak economy.
Regionally, South West and Wales and London reported the highest growth year-on-year, up 1.8% and 1.3% respectively compared to the same month last year. The Retail Park Index saw a year-on-year growth for June of 1.5% and year-to-date results show the sector’s growth is 0.7%. This is in contrast to the UK national, which shows a year-to-date decline of 1.0%. The significant growth of retail parks and expansion of supermarkets could well be stealing trade from high streets, as convenience, accessibility and free parking will all be factors attracting consumers; and figures show that the vacancy rates in retail parks is less than on the high street, Experian said.