Experian Publishes Retail Insight Report for October 2008

News release

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OCTOBER 2008: EXPERIAN RETAIL INSIGHT REPORT

·        Experian Retail FootFall Index falls 2.2 per cent (October 2007 – October 2008).

·        UK Internet traffic to online retailers falls 0.5 per cent (October 2007 – October 2008), the first annual decline this year, according to Hitwise, an Experian company.

·        Almost 8 million sq feet of new floor space added in 2008, but retailers now face problems of over-capacity as economy cools.

·        31.0 per cent rise in retailer administration orders in October (compared with September); retail business failures rise by 17.4 per cent year-on-year.

·        Supermarkets, discounters and value chains expected to come out on top this Christmas.

Nottingham, UK, 31 October 2008 - The UK experienced a drop in both online and High Street retail activity during October, according to the latest monthly retail insight report from Experian^®, the global information services company.

UK Internet traffic to online retailers decreased by 0.5 per cent (between October 2007 and 2008), representing the first annual decline this year according to Hitwise, an Experian company.  On the high street, the Experian Retail Footfall Index recorded 2.2 per cent fewer shoppers compared with October last year. Meanwhile, over three million square foot of new retail floorspace created in 2008 now presents over-capacity problems in a number of major retail destinations across the UK.

Retailers also suffered a significant rise in business failures according to the latest Insolvency Report and Distress Index by Experian. Business failures in the non-food retail sector rose by 17.4 percent compared with last October. At the same time, retailers seeking administration orders leapt by 52.9 per in the last 12 months and 31.0 per cent in the last month alone.

Robin Goad, Director of Research at Hitwise, said:  “UK Internet traffic to online retailers decreased by 0.5 per cent between October 2007 and 2008, the first annual decline this year. Up until now, online retail has been surviving the economic downturn, but this month’s data proves that the sector is not immune.

“Despite the overall decrease in traffic to the online sector, budget retailers are benefiting from the demands of more price-conscious consumers. UK Internet searches for second hand goods have increased 22 per cent over the last 12 months and, as a result, traffic to Classified Retailers increased by 47 per cent over the same period.

“Supermarkets are also benefiting. UK Internet traffic to supermarkets is up 10 per cent year-on-year. Although there has been a small increase in demand for online grocery shopping, the main growth area for supermarkets has been high-ticket consumer electronics goods.

“Online consumers searching for laptops and washing machines are increasingly ending up at sites operated by the likes of Tesco, Asda and Sainsburys. The supermarkets are driving this traffic by investing heavily in search marketing campaigns.”

Commenting on the problem of retail over-capacity, Jonathan de Mello, Director of Retail Consultancy at Experian, said: “This year has seen the opening of an unprecedented number of new shopping centres and whilst some have clearly moved their towns up the retail rankings, such as Liverpool from 15^th place to 5^th place, others have had less of a positive impact, particularly in the current economic climate.

“For every winner there is a loser and Liverpool has clearly had a negative effect on nearby towns such as Wigan, and even on the rest of Liverpool itself, with John Lewis moving into the new Liverpool One scheme.

“Westfield Derby has also hit other areas of retail in the city hard, given the relocation of Marks and Spencer and Debenhams into the scheme. The scheme has enabled the city to compete more effectively with Nottingham and Leicester, but now dominates the retail scene in Derby to the point where there is little or no need to venture outside the walls of the shopping centre. The same is true of Leicester where there is little incentive now to leave the newly extended Shires shopping centre given its size. In the current economic climate, these schemes will inevitably impact on a large number of retailers.

“Retailers may be hoping that the pre-Christmas reduction in the cost of petrol may translate into extra cash to spend on the high street. But as we get closer to Christmas, there will inevitably be winners and losers, and this year it is the discounters, value chains and supermarkets that are expected to come out on top.”

MAJOR NEW SCHEMES 2008