The inclement weather witnessed in the UK and Ireland over the last week is likely to have negatively impacted store retailers, analysts are forecasting, with online orders likely to have surged but the success rate of deliveries yet to be revealed.
Over the last week, the UK has battled the ‘Beast from the East’, experiencing blizzards, gales, freezing temperatures and now flood warnings. The weather led many businesses to close their doors, particularly on the high street, as shoppers chose to stay indoors and shop online instead.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
According to Shore Capital analysts, the extraordinary weather is expected to be reflected in forthcoming secondary market data with references no doubt too in some company statements.
“Footfall is bound to be negatively impacted, so hitting retail sales, whilst the cost of fulfilment for grocers and online retailers is likely to be heightened,” the analysts noted. “The week’s disruption will have been distinctly unhelpful to much of UK retail and leisure but it also needs to be placed in the context of something that is probably quite exceptional, and so requiring a sense of perspective.”
The amalgam of snow and strong winds resulted in severe transport disruption, with many city centre streets impassable.
Footfall to retail parks and shopping centres is also, therefore, likely to have been severely lower week-on-week and year-on-year, the analysts predict. “Additionally, no doubt online orders also surged but whether or not deliveries were successfully made and at what cost to the retailer/delivery company, remains to be seen,” they add.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“Accordingly, we would not be surprised to see some secondary data … characterise a challenging week for retail, one that is likely to colour monthly data. Similarly, the week of disruption is likely to be referenced and reflected in the forthcoming trading updates of many UK retailers. Such disruption needs, therefore, to held at the back of minds when headline sales figures come through.”
The weather will have exacerbated the high street, particularly given the week saw the administrations of Maplin and Toys R Us, along with further challenging statements from Mothercare.
UK retailer Toys “R” Us falls into administration
And the impact on sectors like retailing are expected to half the 0.4% GDP growth many economists had forecast for the first three months of 2018.
Economist Howard Archer, chief adviser to the forecasting group EY Item Club, told the BBC the snow’s impact means the UK’s first quarter GDP may be reduced by 0.1%, or up to 0.2% if the severe weather persists.
“There will obviously be a significant hit to UK economic activity,” says Archer, although he added that it was “important to bear in mind that much of the lost activity will eventually be recouped”.
The Shore Capital analysts offered a similar view: “We continue to see a UK consumer economy where conditions are tight but neither disastrous nor balmy. Behind this assertion is rather weak consumer confidence – which is more we sense about the political circus than anything else – but also full employment, wages and salaries growing only slightly behind ONS CPIH with the two expected to favourably cross in CY2018, albeit the recent weather will have pushed up some energy costs.
“The bigger strategic challenge is the shift to online for the store based non-food retail segments along with the robust and relentless progress and penetration of Amazon.”
