DIY jitters add to retail woes
Monday 28 August 1995
Do-it-yourself retailers are bracing themselves for a disappointing close to the bank holiday weekend, traditionally the last big selling day before the end of summer. In the wake of further signs of weakness in the housing market and flagging sales of new cars to private buyers, the jitters from the DIY sheds are the latest confirmation of sagging consumer confidence.
Economists believe mounting evidence of a slowdown could end the stand- off between Eddie George and Kenneth Clarke over the need to raise interest rates. The Governor of the Bank of England and the Chancellor meet again in 9 days' time to discuss the economy amid further signs that export growth, which has driven recovery so far, is slowing while stocks of unsold goods at home are rising.
Many of the larger DIY groups are pinning their hopes on special offers to boost sales over the three-day break. Sainsbury's Homebase, which took over the Texas Homecare chain earlier this year, ran a 10 per cent-off offer for holders of its Spend & Save charge card on Friday. Do It All, the loss-making joint venture between Boots and WH Smith, is running a "free for all" promotion which offers discounts on selected items. B&Q, part of the Kingfisher group, is offering deals on some kitchen ranges and lawnmowers.
Price cutting by DIY retailers confirms the message from Britain's car dealers who have seen a sharp fall in sales of N-registration cars, compared with last year. With only days remaining in the year's biggest month for vehicle sales, private buyers have voted with their feet. New car sales to individuals are down by almost a fifth to a little over 200,000. Overall sales, including those to company fleet buyers, are expected to be down on last year's disappointing total of 453,000.
Car makers now believe total sales for 1995 will be down on last year's 1.92m. Continued stagnation in the private market is doubly bad news for dealers because it provides much higher margins than fleet business.
In the DIY market, the current spate of offers is thought unlikely to provide much of a lift to a market that is still struggling to overcome weak consumer spending and a fragile housing market.
That has resulted in a major rationalisation of the industry, with Homebase taking over Texas, Do It All closing stores and B&Q soldiering on with a twin-track opening programme of standard-size stores and its larger Warehouse operations.
Clive Vaughan of Verdict Research, the retail consultants, said: "Although the August bank holiday is not always a big event for the DIY market - because it is often too hot for people to undertake many projects - the market is still finding it tough going."
A spokesman for Do It All added: "It hasn't been a bad summer but since Easter the whole industry has been feeling the strain." The summer heatwave has boosted sales of outdoor items but dampened volumes in heavier products. Sales of irrigation products were going well until the introduction of hosepipe bans.
At B&Q, sales of gas-fired barbecues have more than doubled from last year and sales of wooden garden furniture are up by 80 per cent.
Boots said that like-for-like sales at the Do It All stores had fallen by 6.6 per cent between April and June. B&Q also said that trading was difficult, though it reported a 2 per cent increase in sales in the 13 weeks since the end of April.
Sainsbury's acknowledged that Texas would make a small loss in the first half but should return a profit over the full year.
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