Retail footfall figures for July 2011 were down 2.2% compared with the same month last year, according to the Experian Retail Footfall Index.
While figures rose 1.6% between June and July 2011, the increase falls some way short of the typical increase for July, which normally achieves high volume of footfall due to the combination of the start of the school summer holidays, summer sales and consumers buying for planned vacations, said Experian.
However, this year the retailers started their summer sales early, potentially attracting shoppers into their stores during the month of June as opposed to July, said researchers.
Experian said the drop in footfall may also be a reflection of the financial pressures faced by consumers whose pockets are being squeezed by high petrol, rising bills and food prices.
Recent figures by the BRC (British Retail Consortium) however, show food price inflation slowed from 5.7% in June to 5.2 % in July. This was mainly due to the spring heat wave producing extra UK grown crops and reducing the demand for imports and contributed to a price inflation reduction from 2.9% to 2.8%.
A decline in consumers’ discretionary income is taking its toll on the retail sector as evidenced by the Nationwide Consumer Confidence Index and the Office for National Statistics (ONS), which indicates disposable income is 2.7% lower than last year.
This, coupled with the fact consumers are focusing on paying off existing debts, means a general reluctance to spend on the big ticket items, said Experian.
The sectors most closely linked to the housing market have been hardest hit, particularly furniture, homewares, DIY and electrical retailers – a prime example being furniture chain Lombok, which recently announced its plans to close half of its stores amidst tough trading conditions.
The UK Retail Park Index shows an increase of 1.0% in July 2011 compared to July 2010. While the high street is suffering a disappointing performance, the Retail Park sector appears to have attracted more consumers this month. This may be down to the attractive combination of convenience and free parking – although the summer weather will have been a factor in encouraging footfall to the sector.
The next 12 months will present an interesting picture for retailers in the count down to the London Olympics, said Experian. It is hoped this major event can boost spending in the economy and attract additional international tourists.
The last Olympics had a positive impact on the fortunes of sporting retailers and, according to data from Experian Hitwise, inspired consumers enough to make sport and fitness the fastest growing sectors for online visits.