Although this represents just 0.14% of sales during the quarter, brands and retailers should not underestimate the impact of the Games. Those that stand to benefit will be the ones which are prepared.
One of the key factors behind the marginal impact of the Games on retail is tourism. While additional tourists will be attracted to the UK, others will be deterred due to concerns about high prices. As a result, many may delay visits until after the Games when they expect London to be less busy and offer better value.
Sarah Peters, a senior retail analyst at Verdict, said: "Despite the high profile nature of the Olympics, we do not expect it to have the same effect on retail as the royal wedding, mainly because it will have far less of an impact on the day-to-day lives of UK consumers."
However, the overall impact is expected to be positive, with international visitors accounting for the largest proportion of sales opportunities. Many are likely to stay in the UK during the Games, and the weakness of the British pound will make shopping an attractive proposition.
Honor Westnedge, analyst at Verdict said: "Though in the context of total retail the potential gains seem small, these will be focused on just a few retail categories. After clothing and footwear, sales of gifts and souvenirs and jewellery will experience the next biggest uplift (accounting for £21.7 million), followed by homewares, (£9.7 million), and food and grocery (£9.5 million). Spending on DIY and gardening, electricals, furniture and floorcoverings, and health and beauty will account for the remaining £2.3 million.
"Sales will also be centred on London and other Olympic host cities. Therefore, opportunities for retailers in these locations and sectors will be far more substantial. As a result it is important for retailers to be prepared for the Games, ensuring that they are well stocked with British-related merchandise, they have adequate staffing levels and that opening hours are extended to reflect people being at the Games during the day."
Peters added: "With so much media attention focused on London during the Olympic Games, a major marketing opportunity exists for UK retail brands and they could achieve more in the long term. With this in mind, it is essential that retailers present themselves in the best possible way. As so many UK retailers are trying to expand internationally to drive sales, any opportunity to sell their brand on an international scale cannot be ignored. The Olympics being in London will allow retailers to showcase their brands to the world media on a global scale."
*The Olympics and its impact on UK Retail - Verdict view
** Exchange rate at time of posting: £1=R11.25
***In Q3 2012 only
© Verdict 2011
