Olympics success sparks interest in sports and fitness

Archived article dated Tuesday September 2nd 2008

Despite fears over the economy, shops remained busier than anticipated in August with the Experian National Retail Footfall Index registering a rise of 3.9 per cent compared with the previous month.

The rise reverses three consecutive months of falling shopper numbers and suggests that more consumers were out spending in August, despite the poor economic environment. The year-on-year trend is also slightly up with a rise of 0.4%. The pattern of retail activity was mirrored online with Hitwise, an Experian company, which reports that traffic to online retailers was up 3.5 per cent year-on-year.

The rise in shopping activity occurred not just in town centres but also in the ever important out-of-town destinations. Out-of-town retail centres reversed their negative trend of the past quarter by registering a month-on-month rise of 4.4 per cent and a 0.2% increase compared with the same period last year. The rise in out-of-town activity has a much larger impact on retailers' margins since the conversion rate from visits to sales is much higher than in town centres where browsing is more prevalent.

“In the past few months, the level of out-of town retail activity has been adversely affected by the prohibitive cost of petrol”, explains Jonathan de Mello, Director of Retail Consultancy at Experian. “However, since supermarkets began slashing the cost of fuel in the second week of August, we have seen a significant rise in visits to out-of-town. This may have proved the catalyst for retail because in the second week of August visits to out-of-town surged by almost 5 per cent.”

Another possible explanation for the bounce in retail activity is the effect of the Olympics. Robin Goad, Director of Research at Hitwise explains: “The success of Team GB in Beijing had a positive impact on sports retailers. UK Internet traffic to websites in Hitwise's Shopping and Classifieds - Sport and Fitness category reached an all time high during the Olympic fortnight, and for the week ending August 23rd traffic to this category was up 36 per cent year-on-year.”

“Britain's cycling victories particularly benefited the bike retailers,” adds Robin Goad. “They accounted for 4 of the top 10 Sports and Fitness retailers during August, including Halfords at number one. It is also likely that shopping visits to out-of-town locations were helped by the resurgent interest in sports and fitness products and services since many sports retailers are located in out-of-town destinations.”

Matthew Sherwood, senior economist at Experian, adds, “The FootFall data provide a surprising glimmer of hope in an otherwise dismal picture for retailers. If oil price falls are joined by declining food prices that would help to ease the burden of the credit crunch on retailers' fortunes. But retailers are still reporting that this summer has been dismal and it is hard to see how they are going to escape even further troubles in the months ahead, especially as the economy flirts with recession.

“Despite the rise in footfall we still forecast that sales volumes will contract between July and September, the first such fall since early 2006. The next 12 months are shaping up to be the slowest period for retailers since the early 1990s.”

Tagged as: experian

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