FOOTFALL: GLOBAL SHOPPER TRENDS REPORT. Bringing you the latest consumer behaviour trends across the globe (0)

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1 +44 (0) d Ch in n la a gdom Aus trali a Kin United er itz Sw g Sp ain Ho Portugal India Jap an d n Pola Ire lan d ia Ita ly tr us A e nc Fra Germany FOOTFALL: n Ko ng GLOBAL SHOPPER TRENDS REPORT Q Bringing you the latest consumer behaviour trends across the globe

2 intro Welcome to FootFall s third Global Shopper Trends Report Overall global footfall performance Year-on-Year was +2.1%. Global retail out-performed its previous quarterly result in Q3, as international footfall rose from +0.6% in Q2 to +2.1% this quarter. APAC The Asia-Pacific retail sector posted the strongest results, despite turbulence on the Chinese stock market. In fact, China was the only country in the region to record negative footfall activity, and at -0.4% this was still a fairly mild result. India was once again the leading Asia-Pacific region, as the market continues to attract interest from internationally renowned brands. Australia also performed well, thanks partly to an unexpected upturn in sales during August. Portugal Spain Switzerland United Kingdom Australia +2.1% China Hong Kong India In Europe, meanwhile, ongoing instability in the Eurozone and disruption caused by mass migration were not sufficient to dent footfall figures, which grew +1.3% across the quarter. Ireland continued its reign at the top, and retailers are now predicting that the country will enjoy its most successful Christmas trading since This is in contrast to Switzerland, where a declining Swiss franc and falling consumer confidence led to the region experiencing Europe s largest footfall decline this quarter. EUROPE Poland Italy Ireland Germany France Austria Japan 02

3 APAC Troubles for the Chinese stock market dominated headlines during Q3, so it s perhaps surprising that it didn t have a wider impact across the Asia-Pacific region. With the exception of China, all the countries we surveyed actually experienced an increase in consumer activity. India seems to be an unstoppable force, as retail traffic rose for yet another quarter, this time by an impressive +8.0%. It was followed by Australia, which saw footfall rise +5.6%, while Japan and Hong Kong also enjoyed a positive quarterly performance although this was not mirrored in its sales figures. Overall, Asia-Pacific footfall increased +3.3% during Q3 03

4 Asia-Pacific Is there any stopping the Indian retail sector? For the third consecutive quarter, the country s footfall has experienced growth, and Q3 has been its most successful trading period of the year, with retail activity increasing +8.0% Year-on-Year. India s fast-growing retail market has not gone unnoticed by major international brands; according to Times of India, Apple is launching a partnership with consumer electronics chain Croma, which will see the technology retailer build Apple concessions within six key Croma stores. Amazon, meanwhile, is reportedly planning to relocate its servers from Singapore to India, laying a cloud computing network necessary to tap into the country s growing ecommerce industry. The retail giant expects India to be a faster growing market for its business than Germany, Japan and the UK %* INDIA India to be a faster growing market for its business than Germany, Japan and the UK. 04

5 Asia-Pacific The run of good form continues for Australia A +3.5% footfall improvement in Q2 was followed by a +5.6% Year-on-Year increase in Q3. This is despite some instability in the Asia-Pacific region due to the turbulent Chinese stock market. Somewhat surprisingly, retail footfall increased in Australia for the third successive quarter, despite the recent turmoil around the state of the Chinese economy. The muchpublicised softening of the housing sector has also had little impact on consumer activity, with the Federal Government s changes to investor loan approvals seemingly not impacting in store visitation. The +5.6% increase is the greatest Year-on-Year growth witnessed in 2015, buoyed partly by mid-season sale activity in August. Retailers will be banking on a continuation of the strong growth as they aim to convert visitors into customers heading into the all-important Christmas period. August proved pivotal to the overall quarterly results, as retail sales unexpectedly rose by 0.4% after a slight drop during July. Retail experts have predicted this upturn in fortunes will continue into the next quarter, as business conditions are above average. Retail sales unexpectedly rose by 0.4% in August AUSTRALIA +5.6%* Adam Ioakim FootFall s Regional Director, Australia For further information connect with Adam on LinkedIn 05

6 Asia-Pacific While many other Asian nations weathered the Chinese stock market storm, Hong Kong has been significantly impacted by events in its neighbouring country Although footfall increased +1.8% during the third quarter, on the whole consumers were browsing without buying. HONG KONG +1.8%* Spending caution among visiting tourists from China also affected the sector s performance. Retail sales declined for five straight months between April and August, with the luxury sector particularly badly hit. Retail rents on some of Hong Kong s most expensive streets have dropped by as much as 40% this year. Retail rents fell 40% 06

7 Asia-Pacific On the surface, Q3 seemed to be strong for Japan as footfall increased +1.6% Year-on-Year. However, retailers have warned that statistics don t tell the full story, and that lacklustre consumer spending could significantly impact growth when combined with slowing exports and factory output. Household spending increased by 2.9%......but the retail sector believes this is an anomaly. Household spending increased by 2.9% in August, which was more than expected, but the retail sector believes this is an anomaly. In reality, wages are not increasing in line with rising food prices, and many consumers are cutting back their spending in other areas as a result. +1.6%* JAPAN 07

8 Asia-Pacific China s retail troubles continued in Q3 Once again, it became the only Asia- Pacific region to record negative footfall figures with retail traffic dropping -0.4% Year-on-Year. This is unsurprising given Black Monday occurred in August, when the Shanghai Composite index fell 9%; its biggest one-day drop for eight years, sending shockwaves across global markets. It is worth noting, though, that this decline was not as dramatic as Q2, when footfall decreased by -2.0%. Footfall was only -0.2% down on the same time last year, which is much less pronounced than the -2.0% in the previous quarter. Whilst consumer confidence has been hit hard by the stock market crash, retail sales and industrial production have stabilised in challenging conditions. However, the next quarter could see further challenges, as property investments are now driving a house price increase, tightening the budget for consumers. George Dai FootFall s Regional Director, China For further information connect with George on LinkedIn % Q2 Q3-0.4%* CHINA

9 2015 could be the most difficult Christmas The US Federal Reserve could potentially raise interest rates this year, since the recession after retail sales stagnated in September, for US retailers. as producer prices fell at their steepest USA rate in eight months. Some retail experts are already predicting 2015 could be the most difficult Christmas since the recession for US retailers. This is partly due to slow wage growth forcing low and middle income households to spend carefully. Certainly price will pay an important role in holiday season purchases. There are some retailers bucking the trend, however; Primark has just entered the US market with great success, while the automobile and food & beverage industries showed promising growth - driven in part to aggressive incentivisation strategies. 0 Retail Automobile Food & Beverage 09

10 na Ch i g Sp n Ko g n Ho ain Portugal India Jap an d n Pola Ire lan d ia Ita ly tr us A e nc Fra Germany 10 om Kingd There were some nations that shone, though. The Republic of Ireland s stellar year continues, while significant investment in the retail sector has boosted Spain s performance. Primark is just one of the major brands increasing its presence in the region and Spain isn t the only country attracting national interest. There s also been noticeable interested in Poland from a number of international retailers and hospitality companies. Aus trali a United As a result, Q3 was very much a game of two halves with France, Germany, Portugal, Switzerland and the UK all hit with negative footfall results. nd la Just as the Eurozone looks to be settling down, much of continental Europe has been destabilised by the impact of mass migration. er itz Sw EUROPE European footfall rose +1.3% across Q3.

11 Europe A tale of two fortunes Ireland has really set the European pace this year. Footfall increased +6.3% during Q3 marking a third consecutive quarter of improvement. This hasn t necessarily translated into purchases throughout the quarter, though. Sales figures increased during July, but fell by 4% in August, although this was still 9.3% higher than the same period last year. However, a dip in sales has not dented the country s buoyant mood; Retail Ireland has predicted the biggest Christmas since 2008, with sales forecast to reach 4.05 billion. +6.3%* REPUBLIC OF IRELAND Sales 9.3% higher than the same period last year. Consumer activity slumped by -2.5% in Q3 causing Switzerland to fall to the bottom of the league table. This is consistent with a greater-than-expected decline in retail sales during August and a contraction in manufacturing activity in September, which has led to a decline in the Swiss franc s value. Consumer confidence has also taken a knock this most recent quarter, sinking to its lowest level of the year to date. -2.5%* SWITZERLAND 11

12 Europe Rising footfall and robust sales growth went hand in hand during Spain s third quarter The country posted a +4.4% increase in retail traffic, and a 3.1% increase in retail sales figures. Results will no doubt have been boosted by an influx of holidaymakers over the summer Spain attracted a record 47.2 million tourists during the first eight months of There has also been significant investment in the Spanish retail sector, with Merlin Properties increasing its footprint, and Primark opening a flagship store in Madrid at the start of October. +4.4%* SPAIN 47.2 Million tourists during the first eight months of There has been sustained growth in the retail space in Spain this quarter, with an upward trend in all key economic indicators enabling retailers and retail property owners to grow. Economic health prospects remain promising, as GDP is expected to increase by 3.1% according to a recent forecast. Thanks to the increasingly well planned summer sale period and rising consumer confidence, retail traffic performed significantly better than last year, with very strong July and August and a more moderate but still positive growth in September. All in all, the retail sector is enjoying better fortunes in 2015 and growth is likely to continue, encouraging more players in the market to invest in expansion. ITALY Ezequiel Duran FootFall s Regional Director, Spain For further information connect with Ezequiel on LinkedIn 12

13 Europe It s been a strong quarter for Italy A +4.0% increase in Year-on-Year footfall was accompanied by an uplift in consumer spending and improvement in the region s overall economic sentiment. September was Italy s best performing month, when the country s Retail Purchasing Manager s Index rose to 51.7, compared to 48.7 in August. Consumer confidence remains high, while lower inflation has enabled real wage growth among the population. It s not all plain sailing though; there were a number of significant job cuts in September, while operating margins in the country remained low. The positive increase in footfall is supported by a 2% growth in sales towards the end of the quarter, powering Italy s retail sector into a stronger position than last year, and overcoming the deficit from the first months of the year. ITALY +4.0%* The strongest performance has been in North Italy, which has benefitted ITALY from an influx of visitors to the Expo event in Milan over the summer months. It will be interesting to see how this region performs once the Expo closes at the end of October. in Nicola Fagnoni FootFall s Regional Director, Italy For further information connect with Nicola on LinkedIn 13

14 Europe After a slight dip during the previous quarter, Polish footfall recovered to record a +1.2% increase in consumer activity +1.2%* POLAND Optimism remains cautious Optimism remains cautious, however, as the 0.1% sales growth experienced in September was below industry forecasts. The global retail industry certainly has confidence that Poland s retail performance will continue to improve, as five international retailers and restaurant chains recently announced their Polish debut: Colin s, Dairy Queen, Dunkin Donuts, Fuddruckers and Origins. There was good traffic in Polish shopping centres during the third quarter. This upward trend has been visible since the beginning of the year, and it shows that 2015 may be the first year in some time where annual results equal the previous year. Although ITALY consumer habits have become more consistent and the number of visitors to shopping malls is stable, the next quarter s performance will be critical for securing better retail results than the previous year. Maciej Kowalczyk FootFall s Country Manager, Poland For further information connect with Maciej on LinkedIn 14

15 Europe Quarterly progress Austria overcame a surprise -7.1% footfall slump in Q2 The country posted an improvement of +2.8% Year-on-Year during Q3. This figure is in line with Bank Austria s recent business indicator report, which shows the country to be undergoing slow but steady recovery in the post-recession era. In fact, it claims most households believe they are in a good financial position at present. This quiet confidence is echoed outside the domestic market, too online consumer electronics retailer Ao.com is planning an expansion into the country, after success in neighbouring Germany. Germany bounced back from the worst result in our Q2 trends report The country recorded only a slight dip in retail footfall during Q3. Consumer traffic fell -0.4% Year-on-Year, which may disappoint retailers following bumper sales in July. This was contrasted, however, by a weak August, despite low inflation, high wages and solid employment levels. A poor August wasn t enough to drag down quarterly figures, though. German retail sales were also up on the year in Q3, peaking at a 2.5% gain in August just shy of the forecast 3.1% rise. -0.4%* GERMANY +2.8%* AUSTRIA 15

16 Europe French footfall declined -1.0% in Q3 However, this isn t necessarily indicative of trading conditions. -1.0%* Consumer confidence is actually steadily improving, whilst spending reached its highest level this year during July. There is also a sense of innovation in the atmosphere, as the number of entrepreneurs setting up business rose by 3.6% during September, according to French national statistics bureau, Insee. FRANCE Consumer confidence in France is actually steadily improving Entrepreneurs setting up business rose by 3.6% 16

17 Europe Portugal s headline figure of -1.7% footfall decline may not be as alarming as it first seems Retail sales have been rising steadily since last December. Although they slowed slightly in August, overall Year-on-Year statistics show improvement, which demonstrates that those visiting stores and shopping centres aren t afraid to buy. This is accompanied by an increase in consumer confidence although still in the negative, confidence levels have reached their highest since June Overall Year-on-Year sales statistics show improvement -1.7%* PORTUGAL Confidence levels highest since June

18 Europe Miserable weather impacted retail activity during the summer The climate contributed to a quarterly footfall decline of -1.5% in the UK. August was blighted by heavy rainfall, which put a dampener on consumer traffic. Fortunately, an upturn in conditions rescued retail in September, when sales increased by 3.9%. Figures were also boosted by the Rugby World Cup, which commenced on 18th September at 13 venues across the UK. Overall footfall continues to decline, but as the economy stabilises people will perhaps look to spend more on leisure activities, supporting to the country s growing night time economy. The shopping centres and High Streets that adapt to this concept of retail and leisure going hand-in-hand will benefit most. ITALY Steve Richardson FootFall s Regional Director, UK -1.5%* UNITED KINGDOM September figures were boosted by the Rugby World Cup For further information connect with Steve on LinkedIn 18

19 About the Global Shopper Trends Report All retail traffic figures used in this report are original insights from FootFall, the leading global retail intelligence service. We believe it is not enough to understand consumer trends, but acting on that insight to deliver rapid and measurable return on investment. To find out more about how economic, social, cultural and political events are impacting your region, visit our online trends centre. This hub includes FootFall s Global Retail Traffic Index, which provides a barometer of international shopper confidence. We also offer the technology and consultancy to help retailers and shopping centres unlock the potential revealed in this data. We ll support you with recommendations and action plans for tangible performance improvement, from pilot project through to full retail intelligence solution deployment. To find out how FootFall can improve your profits visit or contact our global consultancy team on Tyco Retail Solutions All rights reserved. TYCO and the product names listed in this document are marks and/or registered marks. Unauthorized use is strictly prohibited.

20 FootFall : know your customers inside and out to increase profitability FootFall, the retail intelligence company, works with retailers and shopping centres around the world to provide actionable insight into customer behaviour, which delivers increased revenue and improved profitability. Part of Tyco corporation, we provide 3D data for clear cut decisions. By analysing the most relevant mix of metrics from both store and online behaviour - including customer numbers, queues, sales, marketing and other key performance data - we can identify the widest range of profit drivers. More than 1200 retail businesses across 64 countries partner with FootFall for long-term retail intelligence, including adidas, Hugo Boss, Lacoste, Mango, Tesco and Marks & Spencer Tyco Retail Solutions All rights reserved. TYCO and the product names listed in this document are marks and/or registered marks. Unauthorized use is strictly prohibited. FootFall Head Office Yorke House, Arleston Way, Solihull B90 4LH