ENCOURAGING NEWS FOR HIGH STREETS IN MAY WITH A BOUNCE BACK IN SPENDING FROM APRIL, ALBEIT THAT SPENDING ON FASHION AND HOUSEHOLD GOODS REMAINS CHALLENGED.
According to Diane Wehrle, of Rendle Intelligence and Insights & Beauclair’s Brand Ambassador.
May delivered some encouraging news for high streets, with spend in store recovering from an annual drop of -11% in April to just -0.6% in May. A combination of reasons came into play here. Firstly, a reduction in inflation to 2.3% in April will have eased household budgets which undoubtedly flowed through into improved consumer confidence (GFK’s consumer confidence score moved from -19 in April to -17 in May) encouraging consumers to spend. Secondly, there was an improvement in the weather in May with warmer, drier conditions which always drives up visits and spend in high streets. And thirdly, this year the entirety of the early May bank holiday weekend occurred within the month, whilst in 2023 the Saturday and Sunday fell into April with only bank holiday Monday occurring in May.
The bounce back in spending in May this year was derived from an improvement in all of the key metrics of transaction numbers, customer numbers and the average transaction value, with both more customers making purchases and a higher average transaction value during May this year than in May 2023.
Whilst high street spending in May was virtually on par with May 2023, in order to fully understand high street performance it’s important to the relative performance of different sectors. The results demonstrate that the wider trading challenge for both the fashion and household goods sectors was still present in May, with a drop from May 2023 of -4.2% for fashion and a significant annual drop of -32.7% in household goods spending. In contrast spending in general retail stores during May rose annually by +6.3%, and hospitality and health and beauty spending rose by +3.7% and +2.4% respectively.
The significant annual drop in household spending in May – which has occurred in a similar magnitude in each month of 2024 – is undoubtedly a pull back in spending in this sector following substantial purchasing during the pandemic. However, whilst total household sector spending was -32.7% below the 2023 level in May, and the number of customers making household purchases was -50.1% below May 2023, the average transaction value was +34.6% higher. This is a clear indication that the minority who purchased household goods spent a significantly greater amount, suggesting purchasing is still occurring at the higher end of the value scale.
Fashion is one of four sectors that account for circa 80% of high street spending, (the other three being hospitality, general retail and grocery) and it is the only one of the four that has been consistently recording annual drops in spending this year. However, a sliver of positive news is that fashion spending rose from April to May by +13.1%, which is the largest monthly gain across all ten sectors.
This suggests that towns and cities with an offer dominated by fashion are facing far more challenging trading conditions than those with an offer that is more broadly based. At the same time, however, the double digit month on month increase in fashion spending in May could be an early indicator that fashion spending is on the path to recovery, albeit that the continuation of this will be at least in part contingent on some consistently better weather occurring over the forthcoming summer months.
The table above shows the average performance of a 62 towns and city centres, across a range of key Retail Spend metrics.