Demands on consumers finances could spell trouble for retailers
Last week, retail analyst FootFall saw shopper visits increase by 0.5% on the previous week, with a rise of 1.1% year-on-year, bringing numbers above 2005 levels for only the fifth time this year.
With two of those times having occurred in the past six weeks, it should be an indication of a recovering retail performance.
However, with the surprise decision to raise interest rates to 4.75% by the MPC on Thursday last week and the additional financial pressures put on households, it could spell trouble for retailers.
Natasha Burton, spokesperson for FootFall said “The increase in interest rates could lead to a setback in the retail sector. Consumers are being stretched at the moment, with rising petrol prices, concerns over energy bills and increasing mortgages, so they will be forced to cut back on non-essential spending.
“Last month saw the first month-on-month increase in UK shopper numbers since April, recording a 2.5% upturn in footfall levels – the strongest monthly increase in 2006 to date. Yet despite this, it remains a disappointing year for retailers who have been hit hard by the heatwave and consumer apathy on the high street.
“The next few months will really be a trying time for retailers and we expect to see a number of offers and incentives to encourage people back to the high street”,
FootFall commentary for the week commencing 31st July 2006
Retail FootFall Index – UK National Weekly:
Change for week 31 (31st July – 6th August 2006): + 0.5%
Change for week 29 year-on-year: + 1.1%
Retail FootFall Index – July 2006
Change for July month-on-month: + 2.5%
Change for July year-on-year: – 2.2%
