James Thompson: Doom and gloom – but the high street isn't dead yet
Thursday 06 January 2011
The Christmas trading period is the time when the City gets the chance to slot retailers into the winners and losers enclosure in terms of their trading performance.
This year so far, John Lewis appears to already have one hand on the high street prize while HMV Group seems as far away from that accolade as it ever has.
However, it won't be until Marks & Spencer updates on Tuesday and the dawn of "Super Thursday" next week, when a gaggle of heavyweights from Tesco to Home Retail Group, owner of Argos and Homebase, report that we will get a clear idea of festive trading and the true impact of the snow last month.
No doubt, the snow played havoc with trading before Christmas, as evidenced by Next revealing yesterday it had taken a £22m hit to sales from the severe weather.
But the snow also clouded the forecasts of experts about the outlook for the sector for this year. What is known is not promising – at least for the first quarter. VAT has already gone up and consumers are suffering a squeeze on household budgets, particularly from record petrol prices.
Trying to find a retailer overtly optimistic about the next three months is akin to trying to find a sane person queuing outside a Next store in Milton Keynes at 2.30am ahead its clearance sale.
However, beyond the first quarter, when consumers will have got used to a higher plateau of food and non-food prices, particularly on clothing, the outlook is harder to gauge. After all, many analysts, commentators and journalists were forecasting doom and gloom at exactly this time last year, when there was also a rise in VAT to 17.5 per cent.
While consumers with less money in their pockets are likely to cut back and buy one dress or shirt instead of two when they visit M&S, surely a key lesson of the last two years is that you write off the UK consumer at your peril. In short, most punters seem to keep spending unless they lose – or imminently fear losing – their jobs. Currently, there are about 29 million Brits – marginally up on the start of the year – in full or part-time employment, many of whom have lots more money left in their bank accounts each month as a result of historically low interest rates.
Overall, 2011 will be challenging, most probably tough, for retailers. But unless the number of people in employment falls sharply and interest rates jump, which seems unlikely, it will probably bear a closer resemblance to last year than the bloodbath of 2008.
First full-length look is finally here
World cities ranked in terms of safety, food security and 'liveability'
- 1 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 2 The awkward moment Sarah Palin raised $25,000 for Hillary Clinton's election campaign
- 3 Ball pool for adults opens in London
- 4 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
- 5 Baldness could soon be treated using stem cells, scientists hope
Woman falls to her death as she celebrates marriage proposal at the edge of Ibiza cliff
Sex abuse inquiry: 'Victims receive death threats' after MPs release names online
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Teenager brandishing fake gun taken down by police after demanding airtime on Netherlands' NOS TV station
The awkward moment Sarah Palin raised $25,000 for Hillary Clinton's election campaign
9 reasons Greece's experiment with the radical left is doomed to failure
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
iJobs Money & Business
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...