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Footfall down, inflation up – is Brexit really to blame?

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Footfall is down, inflation is up and Waitrose is limiting free coffees to shoppers who pay. All signs of Brexit? Certainly, one Twitter user quoted in the Waitrose story seems to think so – and satirical site the Southend News Network warned of the move in an unexpectedly prescient spoof story published in the immediate aftermath of the EU referendum result. More serious commentators, however, are drawing strong links between the uncertainty around what will happen as a result of Brexit and other economic indicators.

Diane Wehrle, marketing and insights director at Springboard , sees a connection between the 1% fall in February footfall and the Government’s plan to give formal notice next week of the UK’s plans to leave the European Union.

“Increasing uncertainty arising from the imminent triggering of Article 50 has certainly started to have an impact on purchasing behaviour, the types of destinations shoppers are visiting and how they spend their money,” said Wehrle. “High streets are clearly benefiting as the destination of choice for dining and leisure, whilst shopping centres continue to underperform as they struggle with a weak entertainment and leisure offer, coupled with increasing caution amongst consumers around retail spend.”

High street footfall rose by 0.1% in February, the February BRC-Springboard Footfall & Vacancies Monitor found. But visitor numbers to both retail parks (-1.6%) and shopping centres (-2.6%) fell.

Today’s news that the CPI (Consumer Prices Index) rate of inflation rose by 2.3% in February, compared with the previous year, has been greeted by warnings that Brexit was likely to push prices up. Mark Billige, managing partner at the London office of pricing consultants Simon-Kucher & Partners, points to price rises that have taken the rate of inflation from 0% at the time of the Brexit result to 2% now.

He said: “Research by Simon-Kucher shows that the severity of price increases passed to consumers has been gradually rising since the referendum. This means that as we move closer to the point at which Theresa May looks like she will trigger Article 50 at the end of this month, companies look set to pull the trigger on increasingly significant price hikes.”

Commenting on supermarket prices, he said: “In 2016 the bitter price war between supermarkets meant we saw declining grocery prices, however this year it looks like it will be a different story. While the competition is no less relentless, with the devaluation of sterling since the referendum increasing costs and supplier margins already squeezed, consumers look set to face higher food bills as the supermarkets put through price increases.”

He said that its research showed that 97% Remain voters in the EU referendum were concerned about price rises, contrasted with 57% of Leave voters.

However, not all agree that all this is down to Brexit.

Ken Daly, chief executive of multichannel retailer and consumer goods brand JML, says the term is being used as a lazy explanation for a more profound change in consumer behaviour.

Commenting on the BRC-Springboard findings, he said: “Brexit has had very little effect on footfall or bricks and mortar retail sales. The real game changer is online and particularly Amazon; for non-pleasurable shopping of lower ticket items, people are increasingly simply ordering with one swipe on their phones.

“When people do go out to shop, it is often now for a single item that they have researched online. The face of the average UK consumer has completely changed. Brexit has nothing to do with it.

“The role that high streets and shopping centres now play is changing – shopping is primarily a leisure experience now. Increasingly, people are attracted to the high street because of restaurants and cafes, which goes some way to explaining high street footfall outperforming retail parks and retail as a whole in February.

“Retail parks however are often very uninspiring places which are more functional. Parking is easy, so people will still go, but the retailers must be finding it difficult to counter the online shift. The exception is for big ticket items that people want to see and touch or talk to a salesperson about, such as a sofa or large home appliance.”

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