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How the news influences retail spending – and how to adapt

Wednesday 25 April 2018 Data Insight & AnalyticsProperty DevelopmentShopping Behaviour

Frances Goodfellow's picture
By Frances Goodfellow

When it comes to significant events in the political calendar, the media is often filled with heavy speculation about the potential impact on consumer spending. It’s only natural that retailers should look on and adjust their plans accordingly. But just how much do news stories really affect shopping habits?

At CACI, we have the UK’s largest repository of shopping destination customer survey data, so we’re ideally placed to find out.
 

Brexit and the general election. What impact did they have?

After two major political events in the UK – the EU referendum in June 2016 and the snap general election a year later in June 2017 – we’ve dug into our Shopper Dimensions data to see if we could find any trends that indicated a change in spending behaviour due to these political events. We studied metrics including average spend, conversion rate and dwell time. 

Conventional wisdom suggests that, in times of uncertainty, shoppers hold onto their money. So, did the expected dip in spending come to pass?

To our surprise, very little changed. 

Looking at UK shoppers, we didn’t see any major fluctuation in spending behaviour in the aftermath of either political event. Retail spending continued to grow month on month from June to August in 2016 and 2017. This leads us to believe that there wasn’t a direct impact of either the referendum or election on how UK shoppers were spending.

spending wasnt effected by the referendum or election

The international impact of UK politics

Perhaps the most interesting data comes from the peak period of 2016 – the lead up to Christmas. At this point, we saw an influx of international tourists spending in London, likely taking advantage of the rapidly falling value of the pound and the favourable exchange rate with other currencies.

In fact, international tourists are on average the biggest spenders in London per trip, particularly in the lead-up to Christmas, with the highest spend per individual compared to domestic tourists and locals. This makes them highly valuable to retailers – in particular those at the luxury end of the market.

However, in the same peak period of 2017, retail spend was 17% lower than in 2016. Again, this is likely because the exchange rate had become less favourable for tourists, as the pound recovered against international currencies. This past Christmas, we’ve seen proportionally fewer international tourists visiting the UK’s centres, and a lower spend at high-price point retailers.

tourists are londons biggest spenders
 

Use past data to succeed in the future

Using the data we collect from shoppers up and down the UK, we can track major events and trends to see how shopper spending fluctuates. And although the bulk of UK shoppers seem relatively robust in the face of political news stories, shopping behaviour is however heavily influenced by economic factors such as recessions and fluctuating interest rates. 

To stay consistently profitable, landlords and retailers need to be aware of these changes – and likely future trends – and adapt accordingly.

the bulk of UK shoppers seem relatively robust in the face of political news stories, shopping behaviour is however heavily influenced by economic factors

For example, based on our research, we believe several trends we’ve witnessed to continue through 2018 and beyond. The frequency of shopping trips is likely to continue to fall, due to the growth of destination-led shopping missions, with the large flagship centres’ focus on innovative shopping experiences driving the trend.

“Fast” centres, which offer quick access to essentials such as small grocery shops, will always be the centre of choice for those looking for an easy way to stock up. However, for fundamental centres, which occupy the middle ground of practicality and range, there’s an opportunity to streamline their offering. We think ‘engaged familiarity’ will be the key here – borrowing a few tricks from flagship centres to create a focus on a frictionless shopping experience. 

Whether you’re a landlord or a retailer, you’ll naturally want to deliver an experience that visitors enjoy rather than tolerate. To do this, fundamental centres should prioritise features that help engage shoppers more deeply, such as new fascias, diverse catering options, and environmental extras, such as landscaping.
 

Discover more trends

If you’re interested in learning more about the trend and habits you can glean from our Shopper Dimensions data, dig into the stats in our new report.

You can also look out for our coming blog posts, exploring the rise of click and collect and how catering provision is evolving to match new expectations.

The Evolution of Retail

When it comes to significant events in the political calendar, the media is often filled with heavy speculation about the potential impact on consumer spending. But just how much do news stories really affect shopping habits?

Is retail spending influenced by the news?