Credit Crunch keeping people at home as DIY flourishes

 At the same time the year-on-year out-of-town destination index fell by 3.1%, suggesting that shopping habits are changing as consumers chose to shop more locally as a result of high petrol prices. Meanwhile, interest in DIY activity is soaring as people look to concentrate on making the most of what they have. 

Looking at the footfall analysis by region, the areas most affected by the current economic climate include Yorkshire and Humberside, West Midlands, the North East, Scotland, South Wales, the West and the Eastern regions. 

Conversely, shopping figures in the South East, London and East Midlands, remained unusually high (see regional table below). 

“Overall footfall trends are very much mirroring the state of the economy – on a downward trend,” explains Jonathan de Mello, Director of Retail Consultancy at Experian.  “The main sector to suffer is out-of-town retail warehousing, which has seen a 7.9 % decline versus the same period last year. This is due to falling house prices and demand, driven by the US sub prime mortgage crash, which has impacted retailers most exposed to this sector.

Matthew Sherwood, Senior Economist at Experian, continued, “We see the volume of retail sales falling over the next twelve months. It will be early 2010 before volumes start picking up again in any sort of substantial fashion.”

The combination of a stagnant housing market and rising fuel prices have resulted in a significant drop in visits to out-of-town retail parks.  However, although people appear to making fewer visits, or simply shopping locally, there is evidence of more online interest in DIY and home-wares.

According to data from Hitwise, while visits to property websites have plummeted, UK internet visits to House and Garden retail websites have increased by 20.5% over the last 12 months.

Robin Goad, Director of Research at Hitwise, commented: “It looks as if people are choosing to improve their existing houses rather than move. The interesting thing about the growth in House and Garden retailers is that it applies both to DIY retailers, such as B&Q, Screwfix and Homebase, and furniture retailers such as Ikea, Laura Ashley and Wilkinson Plus. Both types of retailer have increased their share of Internet visits over the last 12 months.”

Jonathan de Mello concludes, “The high street is becoming increasingly competitive and it is a case of survival of the biggest and fittest brands.  Food retailers are in a price war with Tesco launching its Discounter range and Morrison’s pushing its price crunch adverts. ASDA is also showing signs of success with its price lead strategy.

“Halfords is well placed to take advantage of current trends as people keep cars for longer and are less likely to buy brand new.  Moreover, DIY on-line stores including Screwfix should benefit from a focus on making the most of what you have already.

“Some retailers are already in dispute with their banks and many are attempting to change the timings of their three monthly rental agreements, with many now looking to pay monthly rather than quarterly.  Except for the lucky few, who can play to a value offer or benefit from people trading down in their consumption patterns, life has suddenly got very hard for many retailers. As the economic cycle moves on, the brands that do the right thing now will profit most in the future.”

Source: www.experiangroup.com