Retailers must tighten up, toughen up or break the mould.
Figures from retail research group SPSL’s Retail Traffic Index released today confirm that, as expected, the New Year got off to a quiet start in the shops. After a busier than expected Christmas and a mad dash to the first few days of the winter Sales to find the best of the bargains, the number of shoppers out and about in January was 4.0% down on 2005.
According to Dr Tim Denison, Director of Knowledge Management at SPSL; “The fact that more retailers launched their Sales in December this time around will have left its mark on the January figures. More influential, perhaps, are two other telling trends. Firstly, the compression of gift shopping and bargain hunting over Christmas and the New Year into a ever shortening time frame inevitably has an impact on people’s desire to return to the shops immediately afterwards. Secondly, the universality of bargain offers and payment by credit nowadays has pushed the thrill and the appeal of the traditional Sale season towards obsolescence and with it the spike in traffic and sales it once generated.
“Aside from these developing behavioural trends, we must also consider the current economic context. There are more unknowns lodged in people’s heads about the future state of their wealth, security and priorities at the start of 2006 than at any year in the last decade. This is reflected in the response they have made to the ongoing winter Sale offers on the high street. The caution shown by the masses is vindicated by the failure of the few to ride the waves. Access to easy, cheap credit over the years has led to spiralling consumer debt and now we’re seeing some victims. Rising monthly bills and a slowdown in the economy has led to a further rise in the number of people filing for insolvency – up 57% in Quarter 4 2005 against the previous year.
“The number of home repossessions also saw a 22% rise in the second half of 2005 compared to the first six months. These statistics help reinforce our belief that conditions are continuing to tighten for the majority of consumers and this is constraining the number of shopping trips being made.”
“The message for retail 2006 is already on the wall: ‘Tighten up, toughen up or break the mould.'”
