Shopper numbers rise unexpectedly in January

However closer analysis of the data shows the opening up of a North South 'consumer-confidence divide', with shopper numbers in January only up year on year in Wales, the South West and South East whilst the further north you look, the worse the figures, with Scotland and Northern Ireland suffering the worst of all, down 3.3% year-on-year.

SPSL's Dr Tim Denison said; "On the face of it, the year-on-year UK rise will take people by surprise. We are all too well aware of the downbeat forecasts for retailing for the first half of 2008. The explanation is in the detail, though. It was the first week of the year that was responsible for the month's uplift. The surge of shoppers in the southern part of the UK during that first full week of the Sales meant that the figures were 4.9% higher nationally than in 2007.

"However, this surge was muted or non-existent the further north we looked. As we had anticipated, after the initial bargain-mania crush of Week 1, shopper numbers quickly subsided even in the south. In fact, they fell away by 16.3% week-on-week the following week and continued decreasing nationally for the rest of the month.

"On the one hand retailers will be thankful that the pull of the Sales was strong enough to affect national figures positively. It was important to generate strong cash flow and clear out excess stock, albeit at the expense of margins. On the other, it fuels speculation that some shoppers may have viewed the early days of the Sales as their first (and possibly last) shopping indulgence of the year, in preparation for tougher times ahead. No doubt, this mindset will be behind Citigroup's forecast that retail spending will rise by only 1% this year (against 3% in 2007).

"For the past few years, consumers have shown signs of the 'January jitters'; counting the cost of Christmas and looking nervously ahead at fiscal uncertainty. Every month new facts and figures seem to be reeled out that add to their confidence crisis. Most recently, for example, we've learnt that our disposable income is expanding at its slowest pace for 25 years and that 1 million households are paying another £100 on monthly mortgage repayments compared to a year ago. Looking ahead to this month, it's difficult to see anything but another annual dose of the February blues."