FSP Retail Blog

The Retail News Index (RNI) has risen strongly since its seasonal nadir in January. The RNI, an index based on the balance between positive and negative retail news stories, is now back to levels not seen since 2006, outside the pre-Christmas period. There is a clear seasonal pattern to the RNI which typically rises during the Autumn before falling back. The index for January 2009 was the lowest since January 2005, so the rise this year is particularly marked.

FSP is currently investigating the significance of RNI movements. Preliminary analysis suggests that retailer results 7 to 9 months after a strong rise of the RNI also improve. If validated, then we can look forward to better retailer results when turnover and profit figures for 2009 are reported early next year.

This perhaps counter-intuitive suggestion is supported by a couple of recent headlines. On 19th June, the FT led its Companies and Markets section with “UK retail rents forecast to drop by a fifth”, between now and the end of next year. Meanwhile, ONS figures for May showed that the overall seasonally-adjusted value of retail sales for the most recent 3 months were up 1.3% against the comparable period in 2008.

Sales up and rent down sounds like good news for UK retailers. This summary of course does no justice to the complexity of the underlying data but is a reminder that good business is still being done. As always there is a choice to be made which needs to be influenced but not determined by the available evidence.

Note:
Retail News Index (RNI) has been produced by FSP to track the mood of the UK retail market. With SnapShop providing retail and economic statistics to give an overview of retail in the UK, FSP expects RNI to compliment the information and add a dimension not currently available. FSP typically reviews over 350 unique items of retailer news in the trade and national press every month. Each item is scored according to the sentiment of the news (i.e. expanding / strong sales growth: positive, store closures / redundancies: negative). RNI is the sum of these scores, indexed against 2005 and averaged over a three month period to eliminate volatility and produce a reliable trend indicator.
RNI will be constantly updated and the general market trend will be published by FSP on a regular basis. More detailed merchandise category splits can be obtained upon request via the SnapShop team.