Store groups’ sales collapse after inconclusive election spooks shoppers
Leading retailers’ store sales plummeted with a suddenness and depth reminiscent of the worst days of the credit crunch after last week’s election.
Store chiefs from leading chains and niche retailers alike told Retail Week that the resulting political deadlock unnerved consumers and kept them glued to the media. The effect was stark on Friday when sales “fell off a cliff”, and remained down all weekend.
One fashion chief executive said: “The weekend was worse than expected with footfall really low -about 20% lower than we would have expected.
“Consumer sentiment is incredibly negative at the moment - almost as bad as when Lehman Brothers collapsed. People stopped spending once the hung parliament was announced.”
One footwear chief executive revealed: “Trade collapsed following the election. Business has been double-digit down in some areas -some of our stores are doing half of what they were doing last year.”
The boss of another chain selling lines ranging from clothing to homewares said: “Friday and Saturday were terrible. There was a bounce back on Sunday but not enough to make up for the previous two days.”
One fashion director said “those two or three days were absolutely chaotic”. People stopped shopping on Friday and the weekend “remained pretty grim”.
Fashion retailers seem to have been affected most. However, IGD data circulated to grocery chiefs showed the weekend was “flat” across the industry, one supermarket executive said.
Others seem to have been less affected. World Cup promotions are understood to have drawn customers to electricals stores, for instance.
Retailers also reported that despite the fall-off in store sales, online performed strongly over the weekend - reflecting the fact that poor weather also put off shoppers and that many people were already online following developments.
Footfall monitor Experian reported that shopper traffic was down almost 2% on the Friday following the election.
Seymour Pierce analyst Freddie George said the formation of a coalition government is likely to help improve consumer confidence because the detailed negotiations between the participating parties will mean that the policies to be introduced will be made very clear.
What does the coalition mean for retailers?
The policies laid out on Wednesday by the Conservatives and Liberal Democrats confirmed the intention to scrap part of Labour’s planned rise in National Insurance, and affirmed the focus should be on reducing public spending, not higher taxes.
British Retail Consortium director-general Stephen Robertson welcomed the formation of a government because “business needs to have solidity and consistency”.
Vince Cable has been named Business Secretary but the junior ministers were yet to be named as Retail Week went to press.
Prior to the election, the Tories pledged to consider further discounts on business rates, whereas the Liberal Democrats did not. The Conservatives also said they would introduce a supermarket ombudsman and amend planning laws to readopt the “needs test”.