Time for Retailers to Show Their Mettle: Retail Industry News From SPSL

Time for Retailers to Show Their Mettle

The latest Retail Traffic Index (RTI) figures from research group SPSL, show that September shopper numbers were down by 0.5% against the same month of 2006 and down by 8.9% compared with figures from August this year. The topsy-turvy retail year continued with the Q3 overall figure showing no change against last year, following a rise of 2.2% in Q2 and a fall of 0.9% in Q1.

According to Dr. Tim Denison, Director of Knowledge Management at SPSL and leading retail psychologist; “I think many retail analysts will be forced to admit that shoppers have been more resilient for longer into this year than we had expected. That said, it’s difficult to forecast anything other than a challenging next quarter for the retail industry.

“Our data strongly suggest that the gap in the number of shopping trips being made to non-food outlets over the remainder of 2007 versus 2006 will worsen progressively by 0.5% each month, leading to a 2% year-on-year fall in December. Despite this bad news for retailers, the expected decline in shopper visits will actually be less than it was in Q4 2006 compared with Q4 2005 (down 3.1% then). However, it will come at a time when many retailers are feeling the strain of a particularly difficult trading year.

“It should be remembered that this time last year the talk was all about the tightening credit squeeze on consumers and the growing insolvency levels. Twelve months on and the topics occupying the thoughts of economists and city analysts are still much the same, but the situation is just that little bit more acute:

debt levels are still rising and have trebled now in a decade, albeit that the majority is secured on housing

the further tightening of credit conditions after the run on Northern Rock can only add to consumer nervousness

debt servicing as a percentage of disposable income is now at its highest level for fifteen years.

“There is a certain inevitability in the toughening conditions confronting retailers, but there is no industry sector more irrepressible in this country than retailing. Christmas 2007 more than any other of recent times will be all about getting the basics of product, value and service right, delivering what the customer demands, and executing it that little bit better than before.

“Our experience is that retailers now more than ever are applying strict analytical disciplines to their businesses and leaving very little to chance or ‘creative hunches’. They know increasingly that they cannot afford to make even one costly mistake with product, pricing, marketing or staff.”