Cooler weather in May also contributed to reduction in footfall at UK stores - BRC
The fate of Sir Philip Green’s sprawling fashion empire will be decided this week as new shopper figures lay bare the challenge faced by traditional retailers hit by customers deserting high streets, shopping centres and retail parks across the country.
The British Retail Consortium’s (BRC) monthly footfall tracker for May shows store visits hit a six-year low in May as cooler weather and the ongoing political uncertainty around Brexit deterred shoppers.
The BRC chief executive, Helen Dickinson, said the 3.5% decline recorded by its Springboard monthly footfall tracker was the worst since January 2013.
She said: “The UK experienced the worst footfall figures in six years, with declines in every region, and across high streets, retail parks and shopping centres. This reflects our recent sales data, which showed the largest drop in retail sales on record.”
Last week the BRC’s health check of consumer spending showed the biggest drop in almost a quarter of a century, with sales down 2.7% – the weakest performance since it began its monthly survey in 1995.
The high street is being rocked by sweeping changes in shopping habits as consumers shop online rather than visit their high street. Household names including New Look, Mothercare and Debenhams have resorted to an insolvency process known as a company voluntary arrangement (CVA) to close stores and seek lower rents.
Green’s Topshop-to-Burton group is the latest retailer to ask its landlords to accept lower rents as profits collapse in the face of competition from online stores such as Asos and Boohoo. Its high street brands, which also include Wallis, Miss Selfridge and Evans, have been left behind in part because of a lack of investment in a digital strategy. But also because its wealthy owners famously paid themselves a £1.2bn dividend – the biggest in UK corporate history – in 2005.
Last week Green and his Monaco-based wife, Tina, agreed to cough up an extra £30m in a bid to get landlords to rally around a plan that involves rent reductions on nearly 200 of its 570 shops. That is on top of the £150m pledged by the couple to shore up the company’s pension fund and finance a landlord compensation scheme.
The final vote is set to be held on Wednesday after the company postponed last week’s poll when it became clear it had failed to win enough support from landlords. Under insolvency rules, Arcadia could extend the adjournment by another week, if required. Arcadia has previously warned that if the CVA fails the alternative would be administration.
It is not clear whether the new terms would be enough to garner the support of 75% of creditors with a handful of key property firms, including Arcadia’s biggest landlord the shopping centre operator Intu, among last week’s holdouts.
Springboard’s marketing and insights director, Diane Wehrle, said the May figures were disappointing but compared with a particularly strong performance a year ago when the UK had been basking in sunshine, coupled with the run-up to the World Cup and the marriage of Prince Harry and Meghan, Duchess of Sussex.
A breakdown of the figures show the number of high street visits down by nearly 5%, while retail parks and shopping centres saw declines of 0.8% and 3.6% respectively. With all parts of the company recording visitor declines, the worst-hit region was the south west where footfall tumbled 6.1%.
Wehrle said: “All destination types found it much tougher this May to attract customers, but the fact that the greatest impact was felt by high streets is not a surprise given the much poorer weather than in May last year.”
Optimism among manufacturing firms has also slumped to its lowest level in six years, according to a survey by more than 4,000 companies by the business advisory firm BDO. Companies stockpiling goods has “artificially inflated” growth in recent months, it found.
BDO’s Peter Hemington said: ‘The manufacturing industry is set to be particularly badly affected over the next few months as it becomes clear that Brexit contingency planning artificially inflated growth at the start of 2019.”
Source: The Guardian