Department stores see sales growth despite falls in shopping centre footfall
Department stores situated in shopping centres enjoyed growth of 11.2% in like-for- like sales during the first three months of 2013 compared to the same period in 2012, according to research from international property agent Savills.
The study also found that footfall in the schemes that it surveyed was 4.6% lower in the first quarter of 2013, although overall sales in the period rose marginally by 1% indicating that conversion levels remain robust despite consumers shopping less frequently.
Stephen Toal, research director at Savills, said: “It is a positive sign for the retail market that overall like for like sales in Q1 remained steady, despite a decrease in footfall figures across the schemes that we surveyed. Department stores have remained particularly robust mainly due to their diverse offering as well as their drive to embrace additional formats to achieve sales such as ‘click and collect’.”
The Savills research revealed that stationery, accessories, food and beverage, value and grocery retailers also saw growth in sales during the period with an average of 7%. However, like-for- like sales of footwear dropped by 12.4%, while jewellery, health & beauty and clothing sales also fell. Clothing retailers were found to have the lowest sales densities on average in the period at £207 per sq ft compared to £285 per sq ft for footwear and £394 per sq ft for health & beauty.
Toal continued: “It is clear that the retail landscape is still very varied as consumer spending habits are dictated by the wider challenges in the economy. The winners will be those that are able to adapt to and utilise the ever evolving technologies in order to maintain and augment sales. It is also important to note that while some sectors appear to be performing better than others, this is not a reflection of rental affordability. For example, the accessories segment saw one of the highest rent to sales ratios in Q1 2013 demonstrating how like for like sales growth does not provide a full representation of retailer performance.
“Looking forward, those retailers who resist the temptation to discount while investing in service are most likely to see margin growth. However, it will be interesting to see how retailers approach the summer months as we saw some of the highest ever levels of discounting among clothing retailers in July 2012. Whilst this may mean short term sales growth, it is not a strategy which is likely to promote profit growth in the long term.”
