Archive for March, 2011

High Street sales go ‘off the rails’

Monday, March 14th, 2011

I was intrigued by two very different reports last week

A new report commissioned by Kelkoo, reveals that 2011 will see a squeeze on UK retail spending as household disposable incomes fall by 1.5%. Although overall consumer retail spending is expected to increase by 1% year-on-year, this is due to rising inflation, and underlying retail sales volumes are forecast to contract in 2011.

Regional retail spending forecasts for 2011 reveal a North-South divide, with consumers in London and the South East set to spend up to 2.5% more this year, in stark contrast to a 2% fall predicted in the North East.

Chris Simpson, Marketing Director of Kelkoo, comments: “Retailers certainly have their work cut out this year as disposable incomes are hit by austerity measures and consumers tighten their belts to weather the storm. The ever increasing cost of living is hitting the entire country with varying degrees of severity, alongside rising unemployment and increasing numbers of vacant shop units.

Meanwhile Network Rail disclosed that their retail figures out performed the High Street.

Station sales results for September to December 2010 showed a 5.02% growth on a like-for-like basis, compared to the same time the previous year.

In the same period high street sales, as reported by the British Retail Consortium, grew by just 0.40%.

Network Rail’s head of retail Gavin McKechnie said: “Whilst the high street shivers in the cold economic climate, rail passenger journey numbers remain high at 1.3bn a year – the highest number for 70 years. Retailers at our stations benefit from these high passenger numbers and from an upmarket demographic who are keen on impulse shopping. We have overhauled our retail offering by working closely with our partners to maximise value for them and us.

This has resulted in greater choice and quality for passengers and shoppers.”

Last year Network Rail unveiled plans for 75,000 sq. ft. of new space at stations marking the start of a new era for station retail.

OK, so what does this tell us?

Well the North-South divide is no great surprise, especially as unemployment  is predicted to hit 10.7% in the North East compared to 6.5% in the South East.

However, we must bear in mind that London sales are distorted somewhat by the sales of top end luxury items where the clientèle are not as affected by the downturn and which also acts as a ‘honey pot’ for wealthy overseas tourists and residents, not to mention the Bankers who are now back to getting their 7 figure bonuses.

The Network Rails figures are quite interesting.

There’s no doubt that great strides have been made in developing the station’s retail space and it tends to be a very pleasant shopping experience nowadays. Rail travel has been a great success over recent years as, despite higher than inflation fare rises, passenger numbers have significantly increased. This has substantially improved the footfall but may I be cynical and also suggest that the rail delays (particularly during the snow disruption) may have also given passengers more time to shop?

Whatever the reason(s) it is one of the few success stories in sea of retail doom and gloom.

Could your retail enterprise benefit from taking space off Network Rail?