For the second month in a row, retail footfall was up on last year according to the first of the key indicators to be released. The Retail Traffic Index™ from research group SPSL, released today, saw April shoppers numbers up by 2.6% on April 2006, which also had Easter in it last year, and up by 11.4% on March.

According to Dr. Tim Denison, Director of Knowledge Management at SPSL and leading retail psychologist; “We had forecast a stronger month than last year, given the weak Spring and, in particular, the poor Easter of 2006, but we are surprised by the amount of uplift. The week commencing 1st April was the busiest Easter holiday week for three years, but the strong figures are not just attributable to that one week. In fact, the Easter fortnight at 5.1% like-for-like growth was somewhat down on our forecast of 7.3% against last year, but the following two weeks were better than we had expected.

“The warm, dry weather will certainly have played its part. No surprise that the home improvement sheds and garden centres were particularly busy – after all, this is actually their “Christmas” period.  The sector saw retail footfall up by 4.4% on last April and by 17.4% on March.

“These latest monthly figures, the first of the key indices out each month, serve to underline that the consumer’s appetite to go shopping and spend has not yet been undermined by the recent interest rate rises. The weak dollar has definitely helped too. With many goods worldwide being priced in dollars, retailers have been able to pass some of the benefit on to shoppers. Homeowners, in particular, still feel happy to shop and will probably continue to do so until house price rises and interest rates come closer into line.

“The recent reports released by Ideaglobal and the Centre for Economics and Business Research respectively expecting house prices to grow by 5% this year and by just 2% in 2008 indicate that such a realignment is in hand. But if these strong April retail traffic results are matched by sales, some might look to the MPC to increase the base rate by 0.5% next time around, instead of 0.25%, hoping that a short, sharp shock will have greater impact on inflation than a steady tightening. However, such a decision would not be in character with its past and would likely only serve to heighten concerns unnecessarily about an overheating consumer economy.

“When it sat earlier in the month and reviewed all the evidence, the Members of the KPMG/SPSL Retail Think Tank concluded that retail demand would take a downturn in Quarter Two, despite the strong Quarter One figures. The consensus was that it is only a matter of time before the edge is taken off consumer demand, and that that time was fast approaching. If true, then this lends further weight to restrict any forthcoming rate rise by the Bank.

“Two other things, besides its resilience, are becoming apparent about retailing in 2007. Firstly, retailers are showing an innovative side to them that has been absent for a while. Perhaps they feel this is more necessary now than ever, given expectations for a downturn in the economy. Secondly, they are showing more preparedness and aptitude to invest when and where required, whether it is to stimulate brand presence, improve the shopping experience or refresh the ranges. Both aspects are good news for the UK industry and the shopper.”