February blues for retailers, but could the addition of some ‘red and white’ make a difference?

– Horsemeat scandal may be a turning point in the shopper’s psyche –

Latest retail figures released by Ipsos Retail Performance show another
decline in the number of trips being made by UK shoppers to non-food stores.
The Retail Traffic Index (RTI), which measures the levels of shopper
footfall across the country, showed that shopping visits fell in February by
3.6% compared to February 2012 and by 7% against January this year. Northern
England and London and the South East were worst affected where year-on-year
footfall fell by 4.5% and 4.4% respectively.

“The statistics don’t lie; the first two months of the year have been quiet
for retail outlets, though the seasonal fall in February was not as severe
as last year,” comments Dr Tim Denison, Director of Retail Intelligence at
Ipsos Retail Performance. “We expected ‘more of the same’ in 2013 and it has
started out that way.”

Despite current employment growth and inflation easing, the RTI figures
suggest that households remain cautious about their spending on the high
street, constantly alert to breaking news on the likes of fuel and energy
prices rises.

“The general reluctance by consumers to spend is entirely understandable,
given the Government’s fiscal consolidation programme,” adds Dr Denison. “On
the upside, most of the tax rises affecting people have now taken place, and
some householders fearing the worst, may now be feeling a little better
about their finances and might release the handbrake a little. On the
downside, the majority of the public spending cuts are still to hit, so
disposable incomes remain under threat for many, albeit from a different
source.”

As for retailers, they may still be feeling the blues because of low demand,
but on the back of a year that celebrated Britain so well, Dr Denison says
that it could make sense to add more ‘red and white’ on the supply side.

“There has never been a better time than to source from within the UK,” he
explains. “It was less than six months ago that the nation was determined
to keep the national flame alive after the success of the London Games and
on the coat tails of the Jubliee celebrations. With the gradual devaluation
of sterling against the dollar and the Euro since October, import
substitution is a topic that should be high on board room agendas around the
country.”

At a time when cost management remains a prime challenge, local sourcing can
remove unnecessary complications and dependencies. But as food retailers
have discovered amidst the furore of the horsemeat scandal, cost management
should not be at the expense of product quality and supply chain integrity.

Dr Denison says: “The horsemeat fiasco may prompt shoppers more generally to
consider the price pressures they are putting retailers under, in seeking
out ever-better discounts, and the consequences these pressures may bring.”