With valuable personal time being reserved for leisure and experiential activities, footfall patterns across the day are demonstrating distinct splits across time of day and location sector, should retailers be adapting their opening times and will this impact the forecast for Christmas shopping 2016.
The long term trend of declining footfall in our retail destinations is well recorded, however, this top line result is deceptive, and does not reveal the underlying changes that are occurring in the way that consumers are using retail destinations.
Footfall across all retail destinations has declined by -0.1% for the year to date in 2016. Of the three destination types, the clear winner in 2016 has been retail parks with an average increase for the ytd of +1.2%, the improver has been high streets with a drop in footfall of -1.4% for the ytd in 2016, compared with -1.5% for the ytd in 2015; whilst the loser in 2016 so far has been shopping centres with a drop in footfall of -1.8%, albeit that this has improved from -2% for the ytd in 2015.
What is becoming increasingly evident is that the significance of at least some of the functional, transactional activity that used to typify our shopping trips is lessening, and that valuable “trip time” is increasingly being reserved for experience/leisure led visits.
The best illustration of this is in footfall activity across different parts of the day. Whilst overall volumes of footfall remain the greatest during the day time trading period of 9am to 5pm, Springboard is recording an uplift in footfall outside of this traditional working/shopping period, seemingly at the expense of the day time period. For decades, the three hours post 5pm - ubiquitously regarded as the “dead period”- when stores have closed and the night time economy is not yet in full swing was regarded as a lost cause. But no longer – the boom in coffee shops and the hospitality industry generally is driving activity back into retail destinations during a period of the day when in the past tumbleweed would have had dominance over customers.
This trend is clearly visible in footfall trends with daytime high street footfall (between 9am to 5pm) decreasing by -2.5% for the ytd in 2016 compared with a much more modest drop of -0.1% between January and September 2015. In contrast, over the period between 5pm and 8pm footfall has risen by +1% for the ytd, compared with a drop of -0.03% last year. And even in shopping centres - with the majority not being known for their vibrant hospitality offering - footfall during the early evening is proving to be more resilient than during the day, with a minimal drop of just -0.2% for the ytd between 5pm and 8pm, compared with a much more significant drop of -2.6% between 9am and 5pm.
Customer movement away from the day into the evening is demonstrated even further via footfall volumes into retail stores, as retailers are experiencing a proportionately greater reduction in footfall than in destinations themselves. The Capture Rate across the U.K. - the % of footfall that enters stores from the street or mall - has declined in overall terms to 12% for the ytd from14.8% over the January to September period in 2015. However, the reverse is true for food and beverage outlets where the Capture Rate has increased over the ytd from 18.4% in 2015 to 20.3% this year.
In addition to the growing significance for retail destinations of the post 5pm period, the other key trend that has become evident during 2016 is the diminishing rate of increase in retail park footfall. To some degree this was inevitable, as it was always unrealistic to expect that the super-rises previously recorded from 2014 onwards will be sustained indefinitely. The average rate of increase in footfall for the year to date is +1.2%, compared with a +3.2% increase over this nine month period from January to September 2014 and +2.2% over this same nine month period in 2015. The three years from 2013 has seen unprecedented change in retail parks, with landlord driven changes in offer ranging from the introduction of leisure based occupiers such as family friendly restaurants and coffee shops, libraries and cinemas; and also retailers that were new to most out of town locations such as Claire’s Accessories and Primark. It has been the combination of this enhanced offer with free and accessible car parking - which offer convenient and affordable click and collect opportunities - which has heightened the attractiveness of these locations to shoppers and so led to such an uplift in footfall. Inevitably there was always going to be a time when the most significant shifts in footfall as a consequence of these changes worked themselves through and a new stability created, and this is what appears to be occurring. With the most significant shifts in activity towards out of town destinations having now occurred, moving forward the remaining incremental growth will necessarily be lower.
So what do these key changes mean for the success of retail destinations in the fourth quarter of 2016? Entering the final, and what should be, the most valuable trading period of the calendar year will this year present new challenges for retailers. Black Friday appears to be becoming an established date in the retail calendar, although without the long established cultural and social pedigree that this day has in the US as the day after Thanksgiving and the recognised start of the Christmas season. The lack of purpose of this “day” (week for some retailers) in the UK other than to discount price, and the need to avoid the ugly scenes of consumers fighting for the best bargain, suggests that it will increasingly be an online event and so its significance for retail destinations will dwindle.
Moving then into December, and the ubiquitous charge by consumers to acquire just the right present, will undoubtedly drive shoppers back into retail destinations, as trends over the last few years since 2008 have shown that footfall increases over the month from November to December by between 9% and 12%. However, trends have also shown us that the significance of December for shoppers is declining, with annual decreases in footfall in December for the past four consecutive years. On the plus side, however, the lower value of the pound has already made the UK a more attractive focus for overseas shoppers and this attractiveness – borne out of the opportunities for greater cost savings alongside the brands and quality available – will offer some insulation for retail destinations. Overlaid on to this is the increasing demand by consumers for leisure and hospitality driven trips and the synergistic opportunities that this presents for retailers – with the uplift in footfall occurring post 5pm there is an ever greater justification for retailers not only to commence the period of longer opening hours that are a characteristic of December trading in November, but to extend this into January and perhaps onward into Spring. Who knows, it may become the norm for dinner out on Valentine’s evening to include a trip to a favourite jewellery, fashion, gift or even home furnishing shop!