Measuring consumer spending and retail activity on the high street

There is a significant media focus on the problems facing high street retailers in the UK. The intensity of the media scrutiny is bound to increase further after the Christmas break. Which retailers will fail? Which will survive? Which retailers will do better than the competition and perhaps even grow their sales? And how on earth do we get a feel for the overall level of consumer spending in retail outlets?

I was interested in this article in the Telegraph this afternoon. It includes some interesting data on the value and volume of consumer spending. I think data gives a reasonable and consistent sense of what is going on.

For example, take “footfall”, the measure of number of customers entering a store. Note, footfall is a volume measure. It assesses the number of potential customers, not what they actually spend.

According to the article, Tim Denison, retail expert at Synovate, a firm which monitor shopper numbers, calculates that shopper numbers fell by 5 per cent on Saturday and 4.5 per cent on Sunday, compared to the same weekend last year. So it sounds like there are fewer people out shopping that last year, despite the early appearance of heavy discounted sales.

Then there is a proxy measure of spending. If you, like me, like to do some of the Christmas shopping using good old cash, then why not look at how much cash is taken out of ATMs?

According to the article:

“The amount of cash withdrawn from LINK ATMs cash machines over the last seven days fell significantly when compared to the same week in 2007, dropping £226 million from £2.74 to £2.52 billion.”

That’s a drop in cash withdrawals of just over 8%. Less cash being taken out the ATMs - does this also mean less being spent in the shops?

Finally, what about credit card payments? Again the article has some insights:

“Meanwhile, Visa, the credit card company, said that on Saturday 15 million transactions were processed on Saturday – up on last year – but shoppers were spending less, putting £751 million on their cards, a fall of about £50 million compared to the Saturday before Christmas last year. “

That’s a fall of about 6%, if we assume that last Saturday was a representative sample for the recent sales period.

Those numbers look pretty consistent to me. It sounds like the market average is a fall of around 6-8% in terms of total sales. Some retailers will have performed much worse that this, others will have bucked the trend.

We should find out pretty soon what the actual numbers turn out to be.