Burberry runway show, courtesy dailymail.co.uk

2016 isn’t shaping up to be a stellar year for retailers. It didn’t start well with stock markets mayhem making a lot of people nervous. But a partial recovery since then held out some hope… until retailers and luxury companies started giving us their financial results, that is. M&S clothing sales stayed anaemic, Next gave us a gloomy outlook and luxury big-hitters like Prada, Burberry and LVMH have been looking weaker too.

So it’s no surprise to hear that consumers seem to be holding back from shopping. Two new reports about March activity have really rammed that fact home but while one gives us a little cause for optimism, the other makes grim reading. And while the weather was pretty awful, we can’t blame that alone for it being a tough month.

Let’s have the bad-news-that-might-be-good-news first. Retail footfall tracker Springboard said today that footfall to UK stores fell 2.7% in March year-on-year. OK, I know that doesn’t sound like good news but do read on.

The March figure was worse than the 1.1% fall in February and given that Easter was in March this year, you could be forgiven for expecting an uptick, not a downturn.

High streets suffered the most, with footfall down 3.9%. And even though retail park visitor traffic rose 1.6%, that was lower than February’s 2.5% hike. Meanwhile shopping centres suffered almost as much as the high street with a 3.6% drop that was much worse than the 0.6% dip of a month earlier.

Ray of hope?

Picture courtesy El Corte Inglés

But now for the slightly better news… the question is whether this is the start of a downward trend and Diane Wehrle, Marketing and Insights Director at Springboard thinks probably not… phew.

She said: “An early Easter is always a challenge for retail destinations as the bank holiday traditionally kick-starts demand for spring fashion and household purchasing. Adverse weather when new season stock comes in significantly impacts shopping trips. This is exactly what occurred.” So not a long-term trend then, but also not cause for rejoicing as retailers always struggle to recover from a slow start to the season.

Wehrle also highlighted the bad weather caused by Storm Katie. But she added that footfall was more resilient this March than in March 2013, when Easter also fell early and footfall dropped by 5.2%, again due to severe weather conditions “but also not helped by greater economic fragility” at the time.

Why did tourists turn their backs on shopping?

Picture courtesy El Corte Inglés

However, retailers can’t breathe a too-deep sigh of relief just yet because another report, an international one released on Friday, made much more bleak reading.

Global Blue, which handles VAT refunds for shoppers abroad, said spending by Chinese shoppers on luxury goods fell in March for the first time since it started tracking their activity way back in 2010. Spending fell as much as 24% globally and 35% in Europe as terrorist attacks and new visa regulations made even the weak euro look unattractive. Ouch!

Global Blue’s figures don’t include the US unfortunately, nor in-the-news Hong Kong and Dubai (those locations don’t offer VAT refunds for foreign shoppers). But they do include enough countries to give a good overall picture.

And that picture showed overall tourist spending on luxury goods falling 14% last month (it had risen 4% in February) with Russians curtailing their spending almost as much as Chinese travellers. Russian tourist spending fell 22% due to economic problems at home that crimped their disposable income.

This is a cross-sector problem

Global Blue’s figures are bad news all round. The Chinese account for nearly a third of global luxury’s total spend while some major luxury brands sell more than half of their output to tourists in key markets.

But there’s more to it for the wider retail industry. If Chinese, Russians and others aren’t travelling so much, then it’s not only Burberry, Cartier, Louis Vuitton et al who are suffering. In key cities, it means branches of Gap. Zara, French Connection, House of Fraser, Karen Millen and more aren’t getting their custom either.

It seems we all need to keep our fingers crossed that April is bringing better news.

Picture courtesy Springboard