Data received last week from over one thousand retail outlets across the UK suggests that British shoppers may be about to lose their confidence in the economy.

The latest weekly Retail Traffic Index compiled by retail analysts Solution Products Systems indicate that there could be cause for concern.

Although the latest spending figures from BRC-KPMG Sales Monitor show strong year on year growth (5.6% in August), the underlying customer traffic figures from SPS are up by a much lower figure (1.25%) suggesting that those who still feel confident about the economy are spending while others, perhaps hit by redundancies or closures in manufacturing, are holding fast.

Opines SPS director of knowledge management Dr Tim Denison: “This may be the temporary impact of less compelling sales campaigns hitting the high street, accompanied by more people abroad on their summer holidays or it may be the start of something more sinister.”

“However”, continues Denison, “ there is a clear duality in the economy at the moment; whilst the industrial sector is struggling, in the consumer sector retailing continues to record a strong performance for now. The situation is certainly helping to keep the UK economy afloat but we are still keeping a close eye on the monthly figures as the three monthly trends in both traffic volumes and sales figures are edging downwards."

"This implies that nervousness is creeping in and some retailers are prepared at the moment to sacrifice margin and keep prices low in order to keep the shoppers coming in and buying.”

“Retailers are managing to sustain strong performances through a combination of slightly higher traffic flows, higher conversion rates and higher average transactional values – a virtuous circle.”

News source: Solution Products Systems