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Retailers see tough future as footfall drops

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As bed maker Warren Evans becomes the latest retailing casualty, a report by retail consultancy Springboard shows the worst January for sales and footfall in five years.

Footfall (the number of shoppers passing through stores) dropped by 1.6% last month, the worst result for January since 2013, and customer numbers on the high street fell by 1.9%.

Data from Visa showed household spending was down by 1.2% year-on-year in January. Visa accounts for around one-third of consumer payments and suggests that the next set of retail spending figures may be weak.

Warren Evans is the latest in a long line of retailers having problems. Toys R Us UK, Morrisons, Marks & Spencer, Topshop/Topman, B&Q and East have all reported problems and potential job cuts, while furniture group Feather & Black has recently found a buyer after going into administration.

Research from NatWest and consultancy Retail Economics, released last week, painted a difficult picture for the retail sector in the year ahead. Key findings included:

  • sluggish wage growth of 2.2% seen in 2017 will continue in 2018
  • retailers’ profitability remains under pressure, with operating costs increasingly high
  • uncertainty over Brexit and structural changes within retail will exacerbate challenges
  • the shift to online and the experience economy will further strengthen the case for business transformation
  • 36% of consumers expect another interest rate rise by June 2018.

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