Shoppers remain cautious in May says Synovate

UNITED KINGDOM — Following a slow April when both retail footfall and sales in the UK showed large year-on-year declines, the latest figures from Synovate indicate that little has changed. The Retail Traffic Index (RTI), the national metric of footfall entering non-food retail outlets, fell again in May, by 3.7% year-on-year and by 2.0% month-on-month. Figures for the two May bank holiday weekends were stronger, though neither break fell entirely within the month’s reporting period (2nd to 29th May inclusive). Retail footfall over the May Day holiday (1st to 3rd May) was marginally down by 0.5% on the same bank holiday weekend of 2009, but over the Spring Bank Holiday weekend, shopper numbers were 5.4% higher than over the corresponding holiday weekend last year, which fell a week earlier.

“May’s figures look pretty disappointing overall, particularly as May 2009 was a very weak month for retail footfall. They are hardly welcoming to the new Government and certainly reinforce the scale of the challenges ahead,” commented Dr Tim Denison, Synovate’s Director of Retail Performance in the UK. “Shoppers continue to go about their business in a cautious vein. The crowds seen at last week’s UK launch of the iPad and the opening of the Louis Vuitton maison in New Bond Street, though, together with recent trading results, most noticeably Burberry’s, are testament to the fact that people’s appetite to shop has not entirely waned. It remains the case that many people have more money in their pockets than they did a year or so ago, principally on the back of lower mortgage repayments, but they continue to be selective in how and when they choose to spend it. Better results over the bank holiday weekends provide us with evidence that shoppers are still happy to venture out in number when retailers lay on unmissable, headline bargains.”

“We now know the identity of the new Cabinet, but are still to discover the plans laid out in the emergency Budget and their impact on our livelihoods and spending power going forward. It seems highly likely that a rise in VAT will be introduced before the Autumn, causing unwelcome, short-term pressure on inflation and providing the latest in the series of challenges to retailers. Recently published results of the Distributive Trade Survey would indicate that retailers, quite understandably, are becoming more conservative in their procurement plans, uncertain of how strong demand will be, moving into Quarter 3. The volume of orders placed with suppliers dropped dramatically from a balance of +1 in April to minus 24 in May.”

“What we have established since the last quarter of 2008 is that the majority of multiple retailers have learnt how to manage their businesses in a period of prolonged downturn and recession. They are also aware that the impact on the consumer has not been particularly hard felt to date, but as the impending cuts start to bite, there is no room for complacency, or to take the pressure off process changes, efficiency gains and customer scrutiny,” Denison concluded.

Enquiries for interviews with Dr. Tim Denison should be directed to Ms Aoife McArdle on +44 (0)20 3059 5279.

About Synovate Retail Performance

Synovate Retail Performance provides footfall monitoring solutions, shopper tracking systems and in-store behavioural research to retailers worldwide. Its core products – Shopper Count, Shopper Interact and Shopper Engage – scientifically measure all aspects of a shopper experience from store entry to exit. Originally founded as Solution Products Systems Ltd (SPSL) in the UK in 1998, it was acquired by Synovate in December 2007 and now offers unrivalled global reach and scalability through Synovate’s network of in-country teams and three specialist hubs based in Europe, North America and the Far East.

It supplies national and international retailers with essential business metrics to drive accountability and performance improvement. Synovate Retail Performance harnesses powerful retail and shopper intelligence and creates real deployable insight, to deliver its mantra of “Measure, Manage, Improve” to clients.

Synovate Retail Performance is home to the Retail Traffic Index series, which for over 10 years has been the industry’s leading tracker of national, regional and sector retail footfall trends. It is also co-founder of the KPMG / Synovate Retail Think Tank, offering thought leadership on the state of retail health and the future of retailing. Synovate Retail Performance is part of Synovate Customer Experience, Synovate’s global business practice specialising in the profitable management of the total sum of all customer interactions.

About Synovate

Synovate, the market research arm of Aegis Group plc, generates consumer insights that drive competitive marketing solutions. The network provides clients with cohesive global support and a comprehensive suite of research solutions. Synovate employs over 6,000 employees across 62 countries.

For more information on Synovate visit www.synovate.com.