Welcome to the Productivity Podcast. It's our monthly catch-up with Diane Will from Rendell Intelligence. We are now talking about April to May. I think it was a bit of a car crash in April dice hoping for better news in this one.
Speaker 2:
Yes, absolutely, simon. Hello, yes, april was not very great. It was rather dismal actually. Sales in April had dropped by 11 year on year and that was for two main reasons. Firstly, we were comparing a non-easter month because of course easter this year was in march with an easter month last year and of course it rained. We had a lot of rain and that impacted both football and sales. So, um, yeah, we didn't start off on a great foot, but May has been much more encouraging.
Speaker 2:
Footfall is still down year on year, but this is a normal trend. This is the trend that we saw before COVID. So I think we need to get ourselves back into that mindset that footfall has returned to that long term trend of a drop each year. So footfall into stores was 3.6% down overall and this is data from Sensomatic. And actually shopping centres were the worst performing Out of the three types of retail channel high streets, retail parts and shopping centres.
Speaker 2:
Footfall into shopping centres was 4.5% down versus 2.7% in high streets, and probably that's because we had two bank holidays a bit more resilient in the high street the weather in high streets and probably that's because we've had two bank holidays a bit more resilient in the high street. The weather was quite nice, so people tended to shop in town centres, so that's footfall, and I think, as I said, we need to come to expect that to continue its long-term trend of a downward slide. Sales, on the other hand and this is sales from beauclair, who tracks sales in towns and cities, so towns across all of their high streets, physical sales, not um online sales. So all offline, not online um actually bounced back in may and were just 0.6 percent below may 2023, versus 11 percent below 2023 in april. So that's pretty good, pretty encouraging actually.
Speaker 1:
And I know we've talked on previous ones. We'll kind of come on to what's happening in the world in a second. But I mean, health and beauty seems to have performed well the last couple of months. Fashion not so well. Are those trends still there?
Speaker 2:
Yes, they are indeed. So let's talk fashion first, because there's obviously a lot of fashion in all retail channels. Fashion sales dropped by 4.2% year on year in May, which you know obviously isn't great and continues to trend. In April it dropped by 12.6%, so a slight bounce back and actually month-on-month basis, um sales have actually gone up by 13. So you know there's a little bit of a bounce back there, but it's still not great. People are still holding back on fashion, health and beauty. On the other hand, in may, um sales had increased by 2.4 percent from may 2023, um, which you know strong growth and also strong growth in the average transaction value. So the number of customers, number of transactions, was actually down, but the value of what people were buying 4% higher. So people were spending more on health and beauty the product than they were last year.
Speaker 1:
So when people are out shopping there in theory spending more there's just less of us out doing it. Is that right?
Speaker 2:
Absolutely. I think what we've done is we've lost the browsers because, clearly, if you don't want to spend money, you probably won't go into a retail store. You'll find something else to do with your time and if you are looking for certain products, you are likely to spend more on them because they're your favourite type of product. Interestingly and I know you're probably going to ask me about this household product, so that's the next one we're going to talk about and household, just for clarity.
Speaker 2:
So that's everything from sofas, through to soft furnishings, through to um washing machines, dishwashers absolutely small, small ticket items, large ticket items, anything to do with the home, um, and of course, that had a huge uplift during the last few years with covid, you know, we didn't have anything else to spend our money on but our homes, um, and but now we've had the reverse of that and versus last year, versus 2023, in may household sales were 32.7 down, I mean a third lower.
Speaker 2:
So, um, just people aren't you know, they spent money on their homes. What else are they going to do? But, interestingly, like fashion, like that, health and the number of customers and transactions are 50% lower, a huge, huge drop. But actually the transaction value is a third higher, more than a third higher. So those people who are spending that, spending on household, they're spending a lot more money. So it's likely to be obviously people who are at higher end, who have spare cash, who are maybe moving, um, all of those guys are spending more money, but generally, as across the board, we're spending less on the household so it's, I suppose, back to conversation we had quite a while ago about conversion.
Speaker 1:
So if people are in the in the shop, they're in the shop for a reason, because we've lost the browsers, like you say. So it's then about maxim shop they're in the shop for a reason because we've lost the browsers, like you say. So it's then about maximizing the conversion and the uplift from there when you get a chance to speak to them.
Speaker 2:
Absolutely it is. And you know you've got people who have cash and you know there are large sections of the country and large groups of people who do still have cash. But it's making sure you're maximizing the value of the customers you're getting and that has always that's been the case for a long time. You know, if you're going to drive sales, you've got to make sure that your overall transaction value is higher. So make sure you're getting that conversion, making sure, as a retailer, you're maximizing that sale.
Speaker 1:
An interesting couple of months coming up. So at times in the last month we've had the big yellow thing in the sky, which is the sun, which is when, when none of us are quite, uh, quite used to, are we so that that makes a big difference to feel good factor and spending pending general election.
Speaker 2:
So, yes, yeah, it's really interesting actually, because there are a couple of indicators out there economic indicators that I always look at. So firstly, I look at consumer confidence because, um, you know, inflation is one thing and I'll talk about that in a minute but actually how, how confident people feel about their own financial position really plays into how prepared they are to spend money and how prepared they are therefore to go into stores. Um, and actually gfk are the go-to people that I use um and they produce this consumer confidence index score for years and years and years um, and it's widely used within the market. And in may and it doesn't sound great um, it sat at minus 17 um and that has slowly improved since January and improved over the last couple of years. So you know, in April it was minus 19. In May, minus 17. March, minus 21. So we've seen this slight improvement month on month all the way through from February actually. So that is encouraging, really encouraging, and actually probably the big uplift was in people's views over their personal financial situation over the next year and that index score has gone up from two in April to seven in May, so more than three times.
Speaker 2:
So it's a low score, but it was zero in January, so we're seeing that and it's the trend line that we need to look at, that movement upward, which is good. It was zero in January, so we're seeing that and it's the trend line that we need to look at, that movement upward, which is good. And, of course, that's related to the fact that inflation is coming down. You know it's now. In April it was 2.3%. So prices are obviously still rising, but they're rising at a much lower rate. However, in some key sectors clothing and footwear it's still nearly 4%, food it's over 4% and hospitality is 6%. So it's not universally low. That 2.3% is largely driven by reductions in costs for utilities, really, which is actually decreasing. It dropped by nearly 5% last month in April, so it's a mixed picture, but generally, actually, if you take it in the round, it's actually quite encouraging good, that's what we like to hear and any thoughts for, kind of as we head into.
Speaker 1:
I suppose it's peak summer, isn't it, and kids breaking up from school as they finish exams and the school year, so peak holiday season. Have we um got any thoughts on that?
Speaker 2:
well, what normally happens is spending and footfalls start to ramp up a little bit. Some people go holding in the uk, um, people are starting to spend four holidays and, of of course, when the schools break up in July there's holiday spending. So that tends to be the trend and you start to get this peak coming on towards the summer. So hopefully in June we'll see some further strengthening. You know we are in this strange position of the election. The election doesn't necessarily impact spending and consumer behaviour directly and actually, you know, once the election's over, you tend to get this, you know, turning over a new leaf, fresh start approach and people feel a little bit more positive. So hopefully that will help too.
Speaker 2:
So I'm feeling pretty encouraged, actually, over what's going to happen in the summer. We've been through the worst of things, I think. Think obviously there are still economic and financial pressures for households out there. That's, that's undeniable. But you know we've been through worse in the. In the long term that I've been working over you know, the three decades that I've been involved in retail we've seen a lot worse than we are now and fingers crossed.
Speaker 1:
It's sunny, because that makes the world feel a better place, doesn't it? Everything feels slightly less of an issue when the sun's shining.
Speaker 2:
Well, absolutely, and of course you know it does drive spending. You know people buy for their gardens, they'll buy food for barbecues, you know all of that sort of thing. They'll entertain more, they'll go out more. All of that drives spending. So, yes, good weather always does help and we don't want to absolutely 40 degrees because that doesn't help spending necessarily, because people don't go shopping when it's 40 degrees.
Speaker 1:
But some nice mid-20s sunny weather would be great well, fingers crossed, and we'll find out when we catch up next month. Thanks is every day and we will speak in a month's time thanks, simon.
