Interest rate rise hits retail hard
4 septembre 2006
UNITED KINGDOM — Retail research group Synovate Retail Performance's Retail Traffic Index™ (RTI™) for August, released today, shows that the Bank of England's interest rate rise from 4.5% to 4.75% on August 3rd has hit retail shopping trips hard. August is normally a buoyant month due to good weather and school holidays, however not this year. Synovate Retail Performance had predicted a 0.6% rise in month on month shopper numbers. In actuality the month was down 1.3% on July 2006 and the RTI was down 3% year on year.
Commenting on the impact of the interest rate rise, Dr. Tim Denison, Director of Knowledge Management at Synovate Retail Performance said; "This first tightening of policy by MPC for two years means many will be facing increased mortgage payments and heavier overdraft and credit card debt. It comes at a time when the picture for retail was looking brighter and will be a body blow for retailers who've been fighting hard to maintain margins against ever rising energy and other costs and just as the minimum wage is set to rise in October.
"The increasing pattern of its impact on consumer confidence can be clearly seen in the week by week RTI figures for August; the week commencing 30th July got off to a healthy start with shopper numbers up 0.8% on last year, slightly better than our prediction. Then came the bank's bombshell and the figures for week two commencing 6th August were down 2.3% on last year, week three commencing 13th August were down 4.5% on last year and week 4 commencing 20th August were down 6.2% on last year.
"The good start to August was partially due to the end of sales and last minute bargain hunting at the start of the holidays. However, the interest rate rise announcement meant that as the month went on and people re-assessed their financial positions and letters started arriving from building societies and banks, the gap widened. Sadly for retailers, there was no sign that the back to school promotions had had any significant impact on customer numbers. Overall the month ended 3% down on August 2005.
"Looking at regional differences year on year, London's RTI was up 1.8%. This is not necessarily as good as it seems, because shopper confidence in London was still badly affected last August by the terrorist attacks in July, but nevertheless it shows that London has recovered somewhat. However, the RTI was still 3.3% below August 2004 figures.
"All other regions saw various levels of decline on Aug 2005; the worst decline being in Northern England which was down 7.4% on last year. This is a sign that house price rises previously seen more in the South are now catching up with the rest of the country, although with the new interest rate rises the brakes may yet be applied.
"Unfortunately for retailers the outlook for September is not good either. Synovate Retail Performance is expecting a 4.2% drop year on year."
Retailers or analysts wishing to find out more about Synovate Retail Performance's award-winning customer services should contact Dr Denison at Synovate Retail Performance on 01908 682700. Media enquiries should be directed to Theo Chalmers at Verve PR on 01908 275271.
Contact(s) for this press release
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Tim Denison
Synovate Retail Performance |
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34 Walker Avenue |
Tel. +44 (0) 1908 682 700 |
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Theo Chalmers
Managing Director, Verve Public Relations |
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Park House, 8 Grove Ash |
Tel. +44 1908 275 271 |
Synovate Retail Performance provides footfall monitoring solutions, shopper tracking systems and in-store behavioural research to retailers worldwide. Its core products – Shopper Count, Shopper Interact and Shopper Engage – scientifically measure all aspects of a shopper experience from store entry to exit. Originally founded as Solution Products Systems Ltd (SPSL) in the UK in 1998, it was acquired by Synovate in December 2007 and now offers unrivalled global reach and scalability through Synovate's network of in-country teams and three specialist hubs based in Europe, North America and the Far East.
It supplies national and international retailers with essential business metrics to drive accountability and performance improvement. Synovate Retail Performance harnesses powerful retail and shopper intelligence and creates real deployable insight, to deliver its mantra of "Measure, Manage, Improve" to clients.
Synovate Retail Performance is home to the Retail Traffic Index series, which for over 10 years has been the industry's leading tracker of national, regional and sector retail footfall trends. It is also co-founder of the KPMG / Synovate Retail Think Tank, offering thought leadership on the state of retail health and the future of retailing. Synovate Retail Performance is part of Synovate Customer Experience, Synovate's global business practice specialising in the profitable management of the total sum of all customer interactions.
For more information on Synovate Retail Performance click here.
About The Retail Traffic Index (RTI)
The RTI from Synovate Retail Performance is regarded as the national benchmark of retail shopper traffic flow. It is constructed using a nationally representative sample of over 520 million visits to over 3,100 retail premises per annum across the UK, excluding the grocery, convenience and minor retail service sectors.
For further details and a full explanation see here.
About Synovate
Synovate, the market research arm of Aegis Group plc, generates consumer insights that drive competitive marketing solutions. The network provides clients with cohesive global support and a comprehensive suite of research solutions. Synovate employs over 6,400 staff across 62 countries.
For more information on Synovate visit www.synovate.com.