Specialised retail: a challenging September
With a 4.2% fall in sales in specialised shops, the end of the year is a cause for concern, according to the latest report from Procos (the French federation for the promotion of specialised retailing).
According to the latest report from Procos (the French federation for the promotion of specialised retailing), September was a very poor month for specialised retailing in many sectors, with an average contraction in value of -4.2%. This means a drop in sales volumes of between -6% and -7%, as prices rose between September 2022 and September 2023.
August had ended with a stagnation compared to August 2022 (+1%), but activity had deteriorated sharply in the second half of the month, and this situation persisted throughout September. This obviously poses a problem, since September and the back-to-school period account for a larger share of annual business than August for the vast majority of retailers.
In September, the weather, French people's concerns about the economic situation, and the impact of high fuel and food prices all took their toll on sales. Clothing (-14%) had a particularly disappointing month, as did footwear (-9%) and household goods (-6.2%). Health and beauty was the only sector to post growth in sales in value terms in September compared with September 2022 (+5%). Over and above sales, footfall in shops fell sharply in September, by 12.5% compared with September 2022, with a greater impact in shopping centres than in town centres, and particularly in clothing and footwear shops.
Online sales figures are comparable to those for September 2022 (+0.8%). However, some sectors are seeing significant falls in sales over the period, such as gifts/toys/culture (-24%), restaurants (-17%), footwear (-7.8%) and household goods (-3.6%).
After nine months in 2023, the activity of specialised retail outlets in all sectors combined will still increase very slightly in value terms compared to 2022 (+3.3%). However, this means that sales volumes have stabilised, given the price increases over the period. Only one sector has fared better in the face of this pressure on activity, the health and beauty sector, with growth of 10.1%. All other sectors saw their shop sales increase by just 0.1% (clothing) and 3.3% (specialised food).
Retailers worried about the end of 2023
These figures are causing considerable concern for the year's consolidated business, given the vital importance of this period. This is all the more true given that operating costs have risen much faster than sales, and margins are under severe pressure. And costs are continuing to rise. The latest commercial rent index shows an increase of 6.6%. If lessors do not limit this indexation for their lessee chains, the latter will have had to bear a 13% increase in rent over two years, while sales in value terms are tending to stagnate and sales volumes are falling.
This is a very dangerous situation for the profitability and even the future of many shops, and even entire networks. Cash flow problems, fixed costs rising faster than margins, a risky and worrying economic equation. However, according to Procos, rent indexation is one of the only levers that can still be used by 2024.