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Retailers count cost of discount Christmas
New Year a time to reflect on changing shopping patterns
Experian Retail FootFall Index January 2008
Year-on-Year change (January 2007 to January 2008) -0.7%
Month-on-Month change (December 2007 to January 2008) -22.6%
Nottingham, UK, 1 February 2008 - January 2008 saw just a 0.7 per cent year-on-year fall in shoppers visiting UK high streets and shopping centres compared with January 2007, according to new figures from the Experian Retail FootFall Index.
“Such a slight percentage drop suggests that retailers demonstrated resilience in the face of very difficult conditions brought on by the credit crunch and economic slowdown,” comments Experian’s Director of Retail Consultancy, Martin Davies. “However, we should not be lulled into a false sense of security.
“Although there’s only been a small decline in shopper numbers this January compared with last year, the level of sales discounting has been phenomenal. There may have been large numbers of shoppers but they were paying significantly less and this has certainly impacted on retailer margins.
“The first week of January saw shopper numbers up year-on-year, due in the main to early sales, but successive weeks have all seen a fall. Looking UK- wide, the largest year-on-year fall in footfall has been in Scotland (-6.0%) followed by Yorkshire and Humberside (-4.4%). A few regions managed to sustain small year-on-year increases in shoppers in January. These included, for example, the West Midlands (+0.3%) and the South East (+0.8%).
“Looking back at the 2007 Christmas shopping period as a whole, it is evident that fundamental changes are taking place in the way people shop. The traditional ‘golden quarter’ (October to December) as a critical time period for retailers has now shrunk to only a few weeks. Online shopping is partly to blame for the overall reduction in visitor numbers.
Experian’s Hitwise data shows that growing numbers of Internet shoppers are choosing to go online after Christmas to find bargains, but that this post Christmas peak lasts only a few days. UK Internet visits to online retailers fell by 19.1% between the week ending 29 December and week ending 26 January. Furthermore, many shoppers just decided to stay away from stores until mid-December.
“The Internet versus High Street debate is a key issue for retailers and will be in the forefront of retailers’ minds next Christmas. However, this year, the relationship between the two channels has become much clearer. For instance, the busiest weekend for hits to shopping and classified sites this December was the most devastatingly disappointing for visitors to the high street. Furthermore, the realisation that Boxing Day has suddenly become a key shopping day, both in the High Street and online, further clouds a once clear sky.
“Of course, the obvious use of discounting to encourage shoppers into stores will not be forgotten by tactical shoppers or prudent retailers, who will look to play a game of brinkmanship in the countdown to Christmas next year.”
Andrew Burrell, Experian’s Chief UK Economist added: “While mixed results and statements acknowledging that 2008 will be a tough year on the High Street attracted much press in January, attention is now focused on the economic outlook and the prospects for interest rates. The Monetary Policy Committee (MPC) did not move in January, but the aggressive reduction by the Federal Reserve in the US continues to intensify speculation about UK rates.
“Rising inflation is not expected to prevent a further 25 base point reduction in February, followed by another move in the spring. However, this is unlikely to be enough to prevent a further slowdown in retail demand as 2008 proceeds. On top of shifting shopping patterns and more demanding customers, this provides little in the way of comfort for retailers.”
Notes to Editors
The Hitwise UK Post Christmas 2007 Report can be downloaded from here:
Please note, all information presented in this press release and references to the Experian Retail FootFall Index (RFI) is owned by FootFall, an Experian company. By issuing this release, FootFall is allowing the use of this statistical information in either printed, spoken or written format. However, the source of this information must be attributed to FootFall Limited, an Experian company, and the use of statistics to the Experian Retail FootFall Index.
The Experian Retail FootFall Index is endorsed by the BCSC, the membership organisation that represents the retail property industry, and, as such, is regarded as representative of UK shopping habits. The RFI now measures over 150 million shopper visits per month in over 200 retail centres throughout the UK, covering more than 12,000 retail outlets. Over 80% of the UK's population is contained within the catchment area of the basket of centres from which the RFI is produced.
About Experian’s Business Strategies division
FootFall is part Experian’s Business Strategies division, one of the UK's leading economic forecasters, and is a world leader in the provision of retail business information to the retail and retail property markets. The Business Strategies division of Experian provides an understanding of consumers, markets and economies in the UK and around the world, past, present and future. Its focus is consumer profiling and market segmentation, retail property analysis, economic forecasting and public policy research, supporting businesses, policy makers and investors in making tactical and strategic decisions. As part of the Experian group, it has access to a wealth of research data and innovative software solutions.
The division’s economic research team is devoted to analysing national, regional and local economies for a range of public and private sector clients. Its statisticians, econometricians, sociologists, geographers, market researchers and economists carry out extensive research into the underlying drivers of social, economic and market change.
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