World cup economy boom is a myth

June 18, 2010 | by | 0 Comments

The boost in economy expected during the World Cup is a MYTH experts revealed and retail sales may actually take a dive as a result of the tournament.

Research into the past ten major football tournaments has shown that retail sales usually dip below the annual average during the contests instead of booming.

Spending may rise on beer, food and widescreen televisions, but retail outlets are ”deserted” as fans stop spending to watch the footie.

Property consultancy giant King Sturge examined monthly sales growth during European Championships and World Cups from 1990 to 2008 to make the discovery.

Analyst Stephen Springham said: ”Those who expect a significant and sustained uplift in retail sales are wide of the mark – the World Cup may actually depress retail sales.

”The argument is essentially footfall-related. When matches are played at peak times like Saturday afternoons, would-be shoppers will go to the pub or stay in and watch them on television.

”Local high streets and shopping centres become temporary deserts and retail sales suffer as a result.

”The massive feel-good factor of a World Cup is in reality restricted to a very few retail sub-sectors: beer and widescreen TVs predominantly, which are both low margin products, but also sportswear and football merchandise.

”Most other retail sectors see little or no benefit – in fact some may suffer.

”Unfortunately, economic issues such as employment, taxes and interest rates are the main arbiters for the retail market in 2010, rather than the Beautiful Game.”

King Sturge analysts found that during six of the last ten major tournament the economy dipped below the average for the year.

The weakest sales growth figures of the lot coincided with England’s worst performance – when England failed to make it out of their group at Euro 2000.

Retail sales growth was strongest in June 1990, up 7.5 per cent, when England made it to the semi-finals of the World Cup in Italy.

But Mr Springham says that bounce can be explained as the tail end of the 1980s economic boom.

He added: ”Explosive as the growth in retail sales was when England got all the way to the semi-finals in Italia 1990, the fact remains that the economy as a whole was still riding high that year on the back of the boom at the tail end of the late 1980s.

”The figure for retail sales for the month of the World Cup was in keeping with that for the year as a whole.

”Analysis of historic trends does point to certain peaks around World Cups, although invariably these coincided with general retail boom times. In other words, retail sales did well because the general economy was doing well.

”Only during the 1996 Euro did June retail sales growth significantly eclipse the annual figure but this could have been due to it being on home soil and a massive influx of tourists, as much as any feel-good factor.

”The prospect of a great tournament and long involvement from the England team fuelling a prolonged period of retail sales growth is a good story, but ultimately an unrealistic one.”

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