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News - 2 May 2008

April was a good month for retail

April saw a very welcome, if unexpected, year-on-year rise in shopper numbers - the first year-on-year rise for nine months according to the latest Experian Retail FootFall Index. This reversal in retail fortunes - a month-on-month increase of 0.9% between March and April - suggests that shoppers are returning to the high street despite the credit crunch and slowdown in the economy.

Looking at the analysis by region, the growth in shopper numbers has been driven by strong performances in London and South East. With the exception of the North West, South East and London, the rest of the UK has experienced a decline in shopper numbers.

Jonathan de Mello, Director of Retail Consultancy at Experian, said, “These are good results but we should remain cautious and not get too far ahead of ourselves. History leads us to expect a month-on-month drop in footfall between April and May with May bank holidays providing critical weekends for retailers. Given the tightening of consumers’ belts, we expect May to be a tougher month all round. Streamlining store estates will be at the forefront of retailers’ minds and greater efforts will be made to ensure any shopping visits are successfully converted into sales.

“When looking at this increase, the timing of Easter this year needs to be taken into account, as does last year's mini heat-wave in April when shoppers favoured outdoor or leisure activities over shopping. This aside, the retail sector will take some comfort in the overall upturn in visitor numbers to the UK's high streets, shopping centres and out-of-town retail parks.

“It is hoped that after April’s snow fall, some welcome May sunshine will inspire shoppers to purchase new summer clothing ranges; as well as outdoor leisure items such as barbecues, DIY and gardening accessories. With April showing some signs of shopper confidence stabilising, the retail winners will be those who do most to convince the shopper to purchase.”

Commenting on Experian’s Retail Footfall Index, Ernst & Young retail analyst Jonathan Foster said, “Despite slightly higher shopper numbers than expected in April, the outlook remains gloomy for the retail sector. We're not only seeing a record number of profit warnings (22 so far this year from the FTSE General Retailers Index), but an alarming number of retail companies are also falling into administration.

Inevitably, there are more warnings and company failures to come. The intensely competitive environment is also forcing some underperforming retailers to review large parts of their store portfolios, in order to weed out unprofitable outlets. As tough trading conditions persist, this process will continue - in some cases resulting in further store closures from the weaker retailers, particularly in ‘discretionary’ sectors such as clothing, electricals and furniture.”

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