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
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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. Diane returns to chat about footfall and our monthly catch-up. Hi Diane, how are you?
Speaker 2:I'm good thanks. How are you, simon?
Speaker 1:Good, good. It feels we're just talking off air, like the first day of spring, of recording. It's blue sky outside, the temperature's a bit warmer, it is a bit wet, but it feels like we turn the corner.
Speaker 2:It certainly does, and it's absolutely fantastic Looking at blue skies and sun at the moment. It's lovely.
Speaker 1:Exactly. Well, let's find out if the figures tell us if we've turned the corner or not. We'll talk about the elephant in the room in terms of officially being in recession in a second, but let's catch up on news in terms of footfall from December to January.
Speaker 2:So this morning we've got some breaking news because ONS have released their retail sales numbers. But let's talk footfall first, and we've got two sources of footfall. We've got MRI software that look at footfall in retail destinations, and then ShopperTrak or Sensomatic, and they look at footfall into retail stores and it's really very interesting because they tell a different story. So MRI says that footfall in January was 0.8% below January 2023. But ShopperTrak, looking at footfall into stores, was 2.8% below 2023 in January. So it's showing that whilst people are in destinations and of course they're in destinations for a whole host of reasons and that could be going back to the office, of course it doesn't necessarily mean that they're going into retail stores when they're there. So it's still challenging. So the footfall saying it's challenging and does that translate into sales?
Speaker 2:Well, the ONS numbers this morning, which some people may have already picked up on, show a bounce back on a month on month basis in January in volume terms of three point four percent increase. So we're back to now where we were in November in terms of volume, because we had a turgid December in terms of retail sales. Sales were down 3.3%. So that's bounce back, which is positive signs. So we're seeing the signs of breaking through. But in terms of where we're spending that money, both Claire produced data on sales in high streets and they look at different categories of goods, and fashion is really lagging behind every other category, and that's reinforced by the ONS numbers as well.
Speaker 1:And fashion hypothesis of B because we're we spent out in lockdown because we don't need formal stuff for going to work or that kind of stuff.
Speaker 2:All of that thing and of course, you know we're railing back on going out of it, so we don't need as many new outfits to go out. We've probably bought a lot of clothing. I know I bought a little bit of clothing during COVID and then, of course, when you go back to the office, you're only going back to three days a week, so you don't need as much clothing as perhaps we did before COVID. So you go and raid your wardrobe and you make do so, and it's that.
Speaker 2:You know fashion can be costly if you're starting to look at a whole outfit. So that's really where it's hitting and it is a very discretionary spend. And I think also people's perspective and priorities have shifted certainly towards health and beauty, and the Berclair data in terms of what people are spending in the high street demonstrates that in January, health and beauty sales were up 2.5% and that's the highest, best performing category, followed only then by groceries. So you know people are spending on themselves, but they're not necessarily spending on fashion, and that dovetails with the fact that we want to go out a lot as well. You know the focus on socialising is quite strong still.
Speaker 1:Yeah, and I suppose the fashion bit plays back into if you look over the last couple of years you know Topshop have gone out and they are all on all their brands new look of, massively downsized that whole young fashion market. We know it's been tough for a while and clearly he's now playing out in the numbers again. Department stores have struggled, which primarily fashion, although do have, you know, a big element of health and beauty. So I suppose it's not Not a surprise almost.
Speaker 2:No, it's not, and I think you know you get the thing about looking at year on year changes. If you get a big uplift in one year, it's likely that it's going to rebalance in the following year, unless you're on this huge, exponential growth curve and you know people's priorities have shifted. Our lifestyles have changed a little bit enough to make a difference. You know, if you're in the office five days a week, you're continually looking to keep your wardrobe fresh. If you're not in the office five days a week and you're sitting in front of a laptop at home for these two or three days a week, that priority isn't as necessary.
Speaker 1:Yeah, and I suppose the wardrobe's changed, hasn't it as well? In terms of the office world, it's not formal, so you can interchange your jeans and your trainers for work wear and casual. Or if you sat in a team's meeting with your shirt and tie on and your tracksuit pants underneath, you know you only need half an outfit all of a sudden.
Speaker 2:Absolutely, absolutely. I'm a victim of that as many as anyone else is.
Speaker 1:And in terms of, I suppose, the kind of we talked about at the start, the elephant in the room. We're officially in recession, according to the news, but we're talking about football growing slightly back to November. Figures not disastrous year on year. So how do those two things connect, or don't they?
Speaker 2:Well, there is a disconnect between, obviously, what we spend in the stores and what we produce as a nation. I mean, gdp is all about our productivity and we're not clearly not being very productive, but, of course, gdp is a historic record of the past two quarters. So we're in recession because over the past two quarters we've seen negative growth in productivity, and so that's really the history. What we're looking at, we've been talking about here, is January really, so that's much more recent. So the signs are good and actually that dovetails with what the Bank of England is saying about the recession, which is actually that it's a very shallow recession and should end reasonably quickly, much more quickly than other recessions that we've had in the past. They're looking at a timeline of two years for us to be fully out of recession and it's a very, as I said, it's very shallow. It's not a huge dip.
Speaker 2:In 2008, it was a huge dip that lasted five years or so, so we're not in that situation, but it is concerning that as a nation, we're not increasing our productivity, we're not building the groundwork which will help us in the future. I mean the signs we're seeing here for January around footfall and sales and also consumer confidence that we've not mentioned yet are all good initial signs of a recovery and put us on the right path. But we're certainly not there yet and people are still being very cautious. We've got a huge number of people who have still got to restructure their mortgages, which will leave them 300 or 400 pounds a month with a greater overhead. So all of those are still hanging over us, but we're going in the right direction.
Speaker 1:That's encouraging. I'd say, like you, it's worrying. We kind of are where we are, but yeah, there's some, I suppose, things in the headlights, isn't there? You mentioned mortgages there, I think. Is it February, and March is supposed to be the biggest months of people coming off their fixed rates. So you know that's gonna have a significant impact for lots of people. We're kind of entering holiday season, aren't we? You know, we talked about the weather changing. You then feel like what of a book this year are we going abroad? So, again, be interested to see how that sector performs. We've got a potential change of government or not, or at least a general election muted for November. So there's there's lots of choppy water ahead, isn't there?
Speaker 2:There is, and I mean generally. You know you tend to get a form of optimism when you get a change of government, because that's what people want. They want that change, they see it as a new start. So hopefully that will sort of act as a bit of a catalyst. But you're right that you know our priorities as consumers are shifting all the time and we're much more.
Speaker 2:I think COVID has taught us that we're much more into experience and enjoyment and looking after ourselves and being with the people that we want to be with and that we want to spend time with. And that includes holidays, so that can pump primes and spending in the high street. Because of course, if you go on holiday you want some clothing and you want some cosmetics. But it also is a draw on the high street because clearly if you're spending quite a large sum of money on going abroad, then that money isn't available to spend necessarily in stores.
Speaker 2:And you know, coming out of COVID, a lot of people spent a lot of money on their homes. They're now not doing that. We know that. So big ticket items are struggling because you know, once you've bought a sofa, you have bought a sofa. Personally, we've had our sofa for 25 years. So you know it's not a. It's not a purchase you make frequently, so that's going to impact and people are now focusing on what do we really want as an individual, and it is much more about experience and self-care and that's flowing through into the numbers.
Speaker 2:General consumer confidence Improvement good yeah, yeah, I mean GFK are the main source of consumer confidence and in January they're what they call their overall index score, which is an accumulation of different factors that people take into account when they look at and they evaluate their their own confidence rose from to a score of minus 19, which is still negative, but it's back where we were just before COVID and much better than January last year, when it was minus 45. So you can see how consumer confidence has shifted upwards, which is fantastic, and actually people are confident about what's going to happen over the next 12 months because actually the index score for that specific aspect, which is their own personal financial situation over the next 12 months is zero and December is minus two and January 2023 was minus 27. So we can see that people are feeling more confident, which is great for retail going forward, but it takes time that to flow through into actually money through the tills.
Speaker 1:Yeah, yeah, but good, good, it feels like the, the shoots of spring and optimism on that, on that node, doesn't it again?
Speaker 2:It does it does by the time we get to summer and hopefully you know we speak at your conference, then hopefully we'll have some really good news to say.
Speaker 1:Yeah, yeah, it'd be nice to share some good news rather than potentially doom and gloom. But I think all of this is kind of predicated on the fact if you understand the direction of travel and what's happening, then you can kind of steer the ship successfully through that choppy water currently, because there's never a. There's never a time when there's not something on the horizon but it's knowing what it is and how big it is and how quickly you need to steer. So the fashion example maybe that means that there's going to be, for consumers, some good end of season sales coming up, or maybe it means that there's just they've predicted this there's just less stock and we sell through and out, we go. So there's a win-win, I suppose, on both sides.
Speaker 2:Absolutely, and it's also about what do fashion retailers need to do to create that demand. You can't simply say, oh well, people aren't buying fashion, so we'll just carry on doing what we used to do and hopefully they eventually will buy fashion. You need to think about, well, what is their behaviour? What would drive them to spend some money on fashion, and how can we reposition what we're doing to align that to the current consumer? And we've had massive change in the way we feel and we act over the last couple of years and I think we're getting back to a more stable environment. But it's about then understanding what that new consumer is and wants, and that flows through into some of the more sophisticated elements of retail to AI and augmented reality and multi-channel, but also some of the basics as well.
Speaker 2:I'm working with a company called AL Marketing at the moment, who are a shopping centre marketing agency, carrying out a survey of consumers about what they're looking for in their shopping centres and their shopping trips, and some of it is going back to the basics. They want a nice shopping environment, they want lots of good brands, both multiple brands, but also independence, and they want fewer vacancies so some of those things, if those who run destinations can really understand the fundamentals of what consumers want, as well as some of the new developments, then you're starting to really get into the hub of what will drive spending over the coming year.
Speaker 1:Excellent. Well, let's see where we get to next month. Hopefully we can carry on on the good trajectory. Make sure that we hit the summer running and we'll catch up then.
Speaker 2:Yeah, that'd be lovely time.