Footfall drops in sign of pre-Budget nerves
Footfall at UK retailers dropped in September, in a sign consumers are tightening their belts in the face of sticky shop inflation and a looming Budget where taxes are set to be raised by billions of pounds.
Total UK footfall fell by 1.8 per cent year-on-year, according to British Retail Consortium data, extending a run of declining bricks and mortar activity that now stretches back five months.
High street footfall dropped by some 2.5 per cent, with momentum from a flurry of back-to-school purchases sucked out by a combination of London’s tube strikes and a spate of bad weather.
Shopping centres suffered a similar dip in activity, with footfall down two per cent year on year having been flat last month.
The data – compiled by analysts at Sensormatic – also showed retail parks continued to draw in a disproportionate amount of shoppers. Footfall at out of town shopping districts only decreased by 0.8 per cent, an improvement on the 1.1 per cent decrease logged in August.
“Low consumer confidence ahead of a potential tax-rising Budget kept many shoppers away from retail locations in September,” said Helen Dickinson, chief executive of the British Retail Consortium. “While August saw stronger growth in High Street footfall, September saw High Streets back as the weakest performer across all retail locations. For the first time since June, all three retail destinations recorded year on year declines in shopper traffic.”
Shop inflation and Budget keeping footfall low
The retail slowdown is the latest sign of the anaemic consumer confidence that has plagued the UK economy for much of the past year, as shoppers contend with a rising tax burden and the return of inflated prices at the till.
April’s £25bn payroll tax raid and the above-inflation hike to the national living wage have combined with a spate of ingredient shortages to push food inflation to 5.1 per cent.
Those rising food prices – one of the most salient indicators of inflation – have translated through to a jump in household inflation expectations, which a number of Bank of England rate-setters fear could spark a round of more embedded price rises.
Dickinson said that this combined with the upcoming Budget – at which the Chancellor is expected to tighten the public belt by roughly £30bn – was causing consumers to stay away from retailers until the macroeconomic landscape cleared up.
“Retailers’ ability to invest in local communities and High Streets has been hampered by last year’s Budget, which added £5 billion in employment costs to the industry, in addition to a new packaging tax,” she said.
“For retailers to invest in shopping destinations that will entice shoppers back, the government-imposed cost burdens holding back that investment must be lifted.
The upcoming Budget is the moment for the Chancellor to do just that, deliver the Labour manifesto commitment of a meaningful reduction in business rates for the industry and ensure no shop pays more in the process.”