With its weekly UK footfall updates and year-on-year comparisons, Springboard is an invaluable monitor of UK retail – across high streets, shopping centres and retail parks. Springboard Insights Director, Diane Wehrle, gives us an in-depth analysis of how she sees retail in the current coronavirus climate playing out, and her views on what to expect going forward.
How are you viewing footfall behaviour recently?
We’ve had three key dates in the footfall calendar this year, one of which was the lockdown when footfall plunged by about -80%. It stayed very low for a number of weeks, but slowly picked up over the period of time before retail reopened on 15 June in England. Then, when stores did reopen, we saw a big uplift that week of about +45% – depending on the destination type. That was a week-on-week increase. That brought the year-on-year decline to around -50%, even though the shops had reopened. Then the third biggest milestone has been the reopening of hospitality venues on 4 July. That also brought an increase in footfall of about +20% from the previous week in certain places, but it hasn’t really been enough to shift footfall upwards. We’re still sitting on around the -50% year-on-year mark.
Where has benefitted from the reopening of hospitality outlets the most?
It’s certainly helped high streets, which have seen a shift upward in footfall over the last couple of weeks, but less so in shopping centres and retail parks because shopping centres have fewer hospitality outlets, and retail parks even less. They don’t tend to generally have bars and restaurants to a huge degree. They have daytime dining, but they don’t have a strong evening economy, and it’s mainly sandwich chains and coffee shops rather than sit down restaurants. So, we’re not really seeing increases in footfall in those places. Last week, footfall went up twice the amount on high streets as it did in retail parks and shopping centres.
Has there been signs that the reopening of hospitality outlets is having a positive impact on retail?
I think it does help, yes, because if people are out and they can have some lunch, or a cup of coffee and some cake, then they are more likely to spend longer in the destination. We know that for the last few years the shopping trip has been about experience, and more than just shopping and going out to buy stuff. It’s about having lunch or a drink and a get together as well. So, certainly having those hospitality outlets open in high streets has helped retailers. It has also helped some shopping centres, but not all, and footfall in retail parks was flat last week. However, footfall in retail parks is actually only down -20% from last year, but that’s because a lot of retail parks have supermarkets and food stores on them. They’ve actually been quite resilient through the lockdown. Also, homeware stores such as B&Q and Homebase reopened early and a lot of those are on retail parks.
Do you think the mandatory wearing of face masks in retail shops from 24 July is going to put people off going to the shops more, or make them feel more confident?
In some ways it’s going to put them off because some people just don’t want to wear face masks because they are more restrictive, but then in other ways it may make people feel more confident and safer – with everyone following the necessary measures to stop the spread of the virus. It will make a lot of people feel less vulnerable, but it could work both ways. As we’ve never been in this situation before it’s a tough one to call as to how the consumer will react.
What are the really key safety aspects so far that are proving to be the most important to help increase footfall?
Hand sanitizers seem to be proving important, and making people aware that they can sanitize their hands. Social distancing too, of course, as for a lot of people it makes them feel more comfortable, though I think younger people aren’t observing it as much as older people are, as they probably feel less vulnerable to getting COVID-19. But I do think people are generally observing social distancing in some shape or form. It’s also up to the retailers and shopping venues to demonstrate that they are implementing social distancing and to almost force people to do it. While we might get some people that aren’t doing it, if they are forced to, then they do it, even if the space has now been reduced to a minimum of one metre. The government has had a very fine balancing act between maintaining our safety, and making sure people social distance, and reopening the economy. It’s a tricky one.
What impact will more people continuing to work from home, and less people returning to their offices full time in town and city centres, have on future footfall and retailers who rely on their business?
Now that it’s been proven that people can work from home, and a lot of business that didn’t previously have that culture have now adopted that culture, and they have now demonstrated to themselves that it can work, it’s a real issue for towns and cities that rely on that working population to feed and fuel spending at lunch times during the working week. Sandwich and coffee shops are certainly being hit, you only have to look at the problems Pret a Manger is having. Without the working population in towns and cities then spend is inevitably going to be impacted. The problem we’ve also got is with public transport. The government has said that we shouldn’t use public transport unless it’s absolutely essential, and to wear masks when we do, but for many towns and cities that really is the only efficient way to get in – both in cost and time terms. That is a limiting factor for some companies who have offices in city and town centres. We’re not expecting to see footfall recover to last year’s level any time soon.
Do you think that the lifting of travel restrictions to some 59 destinations will increase sales of holiday clothing and accessories on the high street and in shopping centres?
Potentially yes it will, but it really all just depends on the appetite of the consumer for travelling abroad and how safe they feel. Do they feel safe flying? Well, that will be up to the airlines and airports to make them feel safe. If consumers feel happy about that then they will fly and will probably go out and buy some new stuff for their trip but, underlying all of these predictions, is the potential impact of a very significant recession. A lot of people feel quite wealthy at the moment because they’ve possibly been on furlough, getting 80% or 100% of their salary, and they’ve not been spending anything because they’ve been at home. Their bank balances are reasonably healthy because they’ve possibly also had a mortgage holiday as well, but that’s not going to last. People will be coming off furlough and back in to work if they’re lucky, others will not. We’re likely to see unemployment go up significantly, and people will have to start paying their mortgages again. All of these factors will impact on spending later in the year. A lot of it is how confident people feel about their job prospects. A holiday, whenever you take it and however you take it, is not a cheap thing to do, so it’s whether or not they feel confident enough to spend that money now.
Are fashion retailers now more than ever relying on heavy discounting?
There isn’t a massive amount of discounting, well no more than there really was prior to the COVID-19 outbreak in the UK. We collect sales data from around 1,200 retailers across the UK every week, and we’ve seen that over the first two weeks of reopening sales in fashion were just over 50% down on last year. It’s more than that in some other categories. That’s just store sales, not online sales. Some retailers have had a real bonanza in terms of online sales, not all though it has to be said. There will be some fashion retailers, for instance, who focus on more formal clothes for work and the office, and they will have been really impacted. People aren’t buying ‘workwear’, because they’re not going to work. I think people have also generally adopted a more casual approach to dress since they’ve been working from home. You don’t really see people coming on a Zoom call wearing a tie. They may wear a shirt, but often it’s a T-shirt.
What retail stores have been performing the best?
We’ve seen that sales in jewellery stores were down just -5.7% on last year in the first two weeks since they reopened on 15 June, so they have been quite resilient. So, there are some retail categories that are doing well given the circumstances we find ourselves in. But jewellery is more of an ‘experience’ sale because, generally, if you are going to buy jewellery, unless you’re buying quite cheap costume jewellery, you are going to want to go to a store to see what it looks like and to try it. As an example, you’re not likely to spend £1,000 or £2,000 on an engagement ring online, because you will want to try it on, and you won’t have been able to do that during lockdown.
How is physical retail really changing?
We know that a lot of the retailers are looking at how many stores they reopen, and which ones stay permanently closed – as we’re seeing with the likes of John Lewis and Boots. They are clearly looking at how they can cut costs, with footfall and sales down. In some degree those changes were inevitable anyway, but COVID-19 has hastened that change.
What do you think will really influence people spending more in high streets and shopping centres going forward to “kickstart the economy?”
There are so many underlying factors. If we didn’t have a recession it would be good, but we’re going to so we can’t change that. Where people feel confident in their jobs, then that’s the real make or break for spending. People are not going to spend if they feel they are going to lose their jobs, they will rein it in. The government’s priority on creating jobs is therefore really important. That is what is going to fuel everything and drive footfall and spend, not just in retail but in all areas of the economy.