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Brexit effect on the pound and online threat hit UK shops

Lianna Brinded
Head of Yahoo Finance UK
A couple seen taking a selfie in Trafalgar Square with a London Landmark shopping bag on a sunny but cold day in the capital. Photo: Dinendra Haria/SOPA Images/LightRocket via Getty Images

The number of people entering a shop or shopping mall, known as footfall, in March was up 1.4% year-on-year, according to a survey by the British Retail Consortium (BRC) and Springboard.

However, Brexit’s damaging effect on the pound, as well as the continued threat of online shopping and higher business rates, means “the higher footfall has not translated into higher spending,” said Helen Dickinson, chief executive of the BRC. Springboard said that shoppers were showing “prudence.”

“This becomes very obvious when looking at footfall in each week, with the month being bookended by two strong weeks, while footfall plunged in the middle three weeks,” according to Diane Wehrle, insights director at Springboard.

Ever since Britain announced that it would hold a referendum on whether to leave the European Union, the pound has plummeted and struggled to regain ground from 2014 highs amid consistent uncertainty.

Chart: Yahoo Finance UK

A weaker pound against the dollar (GBPUSD=X) increases the cost of imported goods, which is felt by consumers. This compounds the fact that shoppers can generally find cheaper goods more easily online from their sofa.

While the footfall for UK high streets grew by 2.5% annually in March, the number of people going to shopping centres fell by 1% year-on-year.

UK retail has suffered a number of huge blows over the past year. Most recently, iconic music chain HMV recently fell into administration before being bought while Debenhams also collapsed before being rescued.

Other major high street outlets — Poundworld, Toys R Us and Maplin — have disappeared altogether.

READ MORE: Debenhams CEO ‘set to leave’ struggling retailer