James Thompson: Snow shows the need for a slick internet operation
Friday 14 January 2011
Following a blizzard of festive trading updates yesterday, the hoopla around who had a good, bad or ugly Christmas is all but over bar the shouting for another year.
Most retailers will look back on this period and lament huge deluges of snow that wreaked havoc with their peak trading period.
Many will also be cursing the big external factors that continue to put a vice-like grip on household budgets from a hike in VAT to record fuel prices. The ongoing rise in inflation is, of course, just one reason why retailers may be justified in fearing what the first half of 2011 may throw at them, including a potential jolt in public sector job losses. But there are also plenty of other reasons why a large retailer – apart from those selling books, CDs, DVDs and computer games – that has survived the past two years can face the long-term with quiet confidence.
Most of the retailer sector has been through the corporate equivalent of boot camp since late 2008 when it seemed as if Armageddon beckoned. Many of the big chains around today have leaner and more effective workforces, property portfolios and systems, as well as – most importantly – less debt.
However, it would be amiss not to mention the snow regarding the possible retail lessons from Christmas 2010 – such as the importance of having a slick internet operation and a burgeoning overseas model. And here, Tesco remains the yardstick. Despite anaemic underlying festive sales in the UK, it's still on track to deliver pre-tax profits of more than £3.5bn this year. As one non-grocery chief executive said this week, "that's the only figure that matters". When a retailer operates in 14 countries, it can bask in soaring sales in Thailand and China, when most UK retailers are battling blizzards.
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