Diane Wehrle CEO at Rendle Intelligence and Insights joins Simon for their monthly chat about footfall trends and shopping behaviours. They cover:
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Diane Wehrle CEO at Rendle Intelligence and Insights joins Simon for their monthly chat about footfall trends and shopping behaviours. They cover:
#theproductivityexperts
Register for the Produtivity Forum 2024
Follow us on Twitter @Rethinkp
Connect to Simon on LinkedIn
Follow ReThink on LinkedIn
Welcome to the Productivity Podcast. We're back for the big one, so we're talking about November to December and Christmas, sales and football and, as ever, diane Whirl, ceo at Rendle Intelligence and Insights, joins me with all the information. Hi Dye.
Speaker 2:Hello, Simon.
Speaker 1:So this is the big one, isn't it? And I think there's some breaking news in terms of figures that have come out the morning of the recording, so let's dive straight in. I think sales is the bigger story, rather than football.
Speaker 2:Yes, it is actually so. This morning, when we were recording, the ONS, numbers for December have come out and it's not looking very pretty at all. Both volumes and values fell significantly from November to December, so actually it was the largest drop in sales volumes since January 2021, and then we're in lockdown. So you know, it really was very tough out there during December.
Speaker 1:And that's a surprise, isn't? It? Was anybody expecting that. I know we knew it might be tough or relatively flat, but to be, I suppose, that far down back to pandemic level seems somewhat of a surprise.
Speaker 2:Yes, it is. I think it's the magnitude of drop. Actually, that's a surprise because if you look at having been a bit of a data geek, I've looked at the previous years' results for the ONS in December and you do tend to get a little bit of a drop, but nothing like this. I mean this is quite stark and of course you know, because it's discretionary non-food volumes dropped by more than food, although food still did drop. So people clearly had spent some of their cash on Christmas purchases in November on Black Friday, taking advantage of those discounts, which I think reinforces the demand by consumers for Black Friday. I mean everyone. You know there's lots of stuff from narrative going around about whether it's a true sale or you know, and I've written a blog on this and I think it doesn't really matter. You know, for consumers, if discounts are at the right time in their calendar, they will buy and that's exactly what happened and you know.
Speaker 2:unfortunately that dilutes some of the spend that we've always talked about from December, and it's very evident this year.
Speaker 1:So I suppose if I was thinking we're in January now, if I was dissecting Christmas in my old retail world, there'd probably be conversations maybe around having to I'm not going to phrase rethink that whole period. So actually, christmas, if you include Black Friday and Christmas, that's your run-in. However you get the sale. It's around getting the sale at the right value for you and the customer, but almost we seem to delineate the two. Actually, to me it seems like it's all merging into one.
Speaker 2:It is absolutely. I mean, I've spoken for a long time about the fact that Black Friday is the kickoff for Christmas trading. It is real, the gateway for consumers. You know it's the first time they really see a big time promoted, and it also dovetails with all the launch of Christmas lights, and so it's that, and the people are very excited at the beginning of the Christmas trading period, aren't they? It's the first time you've seen all the lights on the trees and consumers love it, you know they.
Speaker 2:Maybe consumers take the day off to go out and shop on Black Friday or do that over the weekend, because it's not one day, of course. It's at least a week, if not two. And so, yes, the shape of the Christmas trading period has inevitably changed, and I talk a lot about this dumbbell effect. So we have a big surge in spending, as it's a hands-on footfall on Black Friday, and then you have this drop away over the few weeks and then it ramps up very close to Christmas. So, yes, as a retailer, I would definitely be looking at my pattern of trade over that period and setting myself up to make sure that I can deliver what the consumers want as early as possible and capture that, that that spend.
Speaker 1:Yeah, and I suppose it correlates exactly with what we've seen, isn't it? So sales have been less prevalent this year. There's been less volume, less good deals as we kind of come into Boxing Day onwards. Certainly, the supermarkets did a great job this year of getting out quickly. I think in our local one before New Year there were Easter eggs already on sale to fill the space because they did clear the Christmas so quickly, so they'd kind of managed stock well. They'd cut quickly rather than reducing five or six times. They'd gone deep quickly and then we're out, which, again that kind of cleaning of entry policy just makes sense to me. Do you really want Trader Mint's pie is hanging around till the third or fourth of January, when you've touched them 16, 17 times, to move them around the store?
Speaker 2:Absolutely. And I mean, you know the fact that there are less sales aren't great, you know it's not. The consumerism could moan and groan, but actually from the retailer perspective that's exactly what they should be. They shouldn't be great, you know, because if they are great then they've overordered and they've wasted a whole host of investment in stock that is just taking up space and revenue and losing margin. So actually it's testament to retailers that sales weren't great, you know, and the fact that you know there wasn't much left, which is fantastic inventory management. So it seems that retailers did have it nailed really this year. But you know you can never outpace the consumer. The consumer will do what the consumer will do and you know it's very clear that the cost of living, economic challenges meant that people reigned back their spending.
Speaker 2:Food was slightly performed, slightly better than non-food, because you know Christmas is all about Christmas lunch and food and people were unwilling to sacrifice that. Why would they? I certainly wouldn't want to do that. It still suffered, but it didn't suffer as much as non-food. On a positive note, when you start to look at the non-food categories, there was a range of performance. Department stores didn't do well at all, but clothing actually out of all the categories was probably the better performer. Yes, there was a slight decrease in volume sales from November to December, but actually only marginally, about one and a half percent, and that's probably due to the the range of pricing within the clothing category. You can you can buy some clothing at a fairly low price or in a high price and you have that option, whereas jewellery, for example, did struggle and you know there is a limit to how low you can go with jewellery. It is quite a significant investment for most people.
Speaker 1:And how did that correlate to sales? Weren't great. How did that correlate to footfall? What did that look like?
Speaker 2:Well, footfall actually increased from November to December, which is an established pattern. You know there are more people going out shopping in December than there were in November. But you know, and the month on month change was marginally higher this year than it was last year. It was 6.1% up versus last December where it was 5.8% up, so you know. But and annually it went up by 0.2%, so it's virtually level with last year. So it's clear that what we're seeing is that people are going out and having a window shopping and doing that browsing, but they are very, very cautious about what they're actually buying and they're using, you know, physical retail to make those choices very carefully. I mean, shopping centres did better than high streets. But that again is always the case in December because shopping centres, just by their sheer scale and critical mass of retail and brands, will attract shoppers in that Christmas trading period and of course most of them are undercover. So it does help if it's pretty rubbish weather as well too.
Speaker 1:Yeah, yeah. So maybe we didn't do enough with the offers that we're on to attract people because there were people out and about or, as you say, the kind of economy's got the better of us and we've gone for the deals earlier. So interesting combination and on that point, of kind of regional shopping centres. So by that, the meadow halls, the lakesides, blue waters, traffic centres of this world, Westfield, Stratford and White City there's kind of been some press in the last seven days around those are the, those are going to be the kingpins of retail, if you like. So that's where we're all going to go.
Speaker 1:I don't think they've ever been short of football or sales or the big brands, but I suppose that the underlying narrative seems to be that they're going to be the places that hold retail up in the coming year. And you know there's talks of various people investing in the, in those kind of centres. Now, as you know, retailers do Mike Ashley's name was mentioned in it so diverse of our portfolios into property, but also those being the places where we're going to get drawn to to have that day out.
Speaker 2:Yes, absolutely, and I mean we've been talking about I mean I think I went to a conference I hate to give any reflection about age, but I think I went to a conference in the 90s where we were talking about the race to the biggest. You know, and how they are and biggest centres are going to all out and that's just really been amplified through the changes in consumer behaviour as a consequence of COVID. So we know that. You know, hybrid working is now part and parcel of our economy. We're not in our towns and cities as much and therefore those smaller centres that perhaps part of the urban fabric will see greater challenges than the larger ones where we go out for a particular day.
Speaker 2:So if we're working at home for two or three days a week, we're in the office two or three days a week. We may well reserve our shopping trip for the weekend and we've. You know I already saw changes, slight changes in football across the week. We were seeing marginal increases proportionally on Saturday because people were going out and Saturday having a longer trip doing much more, benefiting from the hospitality element. That experiential trip was talked about 10, 15 years ago but I think it's really coming to fruition now. So it's those bigger places that can offer that diversity that will do well.
Speaker 1:And it's kind of the American model, isn't it? So there's not really high streets in America, it's all retail parts and big condition shopping malls.
Speaker 2:Yeah, it's interesting, I think, you know, I think actually, laterally, the Americans have decided that, realised that actually you do need people back in your urban environments, but they've got a long way to go to. Apart from the big cities like New York and Boston and Chicago, they've got a long way to actually achieve that. We're in a better place than that. But we've still got a huge number of smaller shopping centres that perhaps too large for their catchments now, that were built in the 80s and the early 90s, that we'll really need to think carefully about what their future is. You know, is it retail or will it simply need to be either converted or demolished and recreated as a different, different environment, either residential or a hybrid selection of retail on the ground floor and residential above. So there's going to be some changes that we're going to see in those smaller shopping centers over the next sort of few years. Really.
Speaker 1:Yeah, and I think even the ones that the ones that you'll see where there's still an empty Wilco's or an empty Debenhams probably an indication of those it took. I was in Birmingham before Christmas a couple of times and they just opened the new Marks and Spencers where Debenhams was. Debenhams have been closed. What five years maybe. So it shows, even in the second biggest city in the UK it took them five years to find somebody to take that space.
Speaker 2:Absolutely. I mean it's almost like selling a very expensive house. You know there are just fewer buyers of those spaces and also they're complex urban environments and any work is very expensive. Generally the old stores aren't configured as well as we would like to have them these days. They need a lot of work internally because they probably haven't had an investment for a number of years. And there's been lots of talk about converting ex-department stores vacant-dispartment stores into residential. And that is complex in itself because of course there's big floor plates, much of which don't have any light. So unless you're happy for apartments not to have any windows, it's very hard to actually convert those into effective living spaces very often. So that limits what they can do with those spaces. So it does take a long time because cities are particularly complex in terms of managing regeneration and redevelopment projects. So it isn't surprising it took a long time. It's always a little bit sad, but it isn't surprising.
Speaker 1:Yeah, yeah, and there's all the. They are where they are for a reason, aren't they? There's typically no parking, you surrounded by shops as well, and therefore you know you've got early deliveries, late deliveries and all the, although the picture wouldn't get in a in an estate or in a more urban area.
Speaker 2:Absolutely. And you know there's been lots there has been for 20 years or more talked about urban living and town centre living, and it is. It is increasing, particularly for students, which of course they're in sort of the right places for students with urban universities. But when it first started, you know people were promoting urban living and it sounded great. And then people started to live in these towns and cities and found that it was quite noisy. You know they weren't really expecting the noise, but of course, as you said, there's deliveries, there's hospitality, and unless you're prepared to accept those noises as part and parcel of your, of your way, life, then it's, you know it's, it's, it's quite complex. Yeah, absolutely.
Speaker 1:Okay. So December bit of a shock, not what we were expecting. Maybe January Typically not great, is it, as we kind of come out of a Christmas, people are paying off credit card bills, where there's a bit grim. We're kind of all hoping that we can get to spring and summer quicker than than we can. So any expectations for January other than the norm?
Speaker 2:I think it's going to be really tough this January. Actually, I think you know, when you take December's a lead into January, the pattern of behavior that was exhibited in December is going to flow through to January. I mean, january is always much lower in, you know, in terms of spend and footfall. You know it's always about 20 25% lower. That's just it's. You know, that's just part of the natural dynamic of retail. But it's about the underlying demand that sits below that January. You know how is that going to Flow through, and it's not just January, of course, it's February.
Speaker 2:So we've got a whole host of people who are coming off fixed rate mortgages. You know they're going to see huge increases in their mortgage payments over the next couple of months. That's not necessarily all in January, that can go through into February too. So you know price is going to be really important, customer relationships are going to be really important and the enduring loyalty of customers. And also, I think, because actually in December on, in terms of sales, what they call non-store retail that's what you know an S call it, but actually that comprises mainly online was actually slightly more insulated than Than physical, than retail overall, which indicating that you know it's the transactional, the convenience. That actually helped a little bit. So making sure that there is a Holistic offer that you know once you get your customers. Well, however you get your customers, you can often the best customer journey that they can have, whether that be store first, then online, online test, then store.
Speaker 1:Yeah, well, not a great start, but We'll see where it heads. I think we said in some of the early ones last year that this year was potentially going to be tricky for all those reasons. And We've got a general election I think we have later in the year and all sorts of other stuff. So, yeah, let's hope it's not too turbulent. But, as ever, will keep you updated on the monthly podcast. So, thanks again, dai, let's fingers crossed. We we get some as normal news in the next one and no shocks.
Speaker 2:Yes, let's. Let's keep our fingers crossed and look forward to speaking next month.
Speaker 1:Okay, take care, catch you soon.
Speaker 2:Bye.