Leading article: A retail sector in need of therapy

Share
Related Topics

At a time of rising unemployment and widespread economic misery, it feels perverse to be poring over the performance of our large retailers in the Christmas shopping frenzy. But we need to pay attention to these sales figures because, like it or not, our national economic health relies heavily on retail spending, and Christmas is the biggest annual selling period. The behaviour of consumers at this time of year is a good guide to what is to come for the wider economy.

So what do the figures show? The first indications are that last month's sales volumes are not as bad as some in the markets expected. The demise of Woolworths, Zavvi and several other smaller retailers in December had prompted several analysts to predict a catastrophic decline in sales over the festive period. In fact, large retailers such as Debenhams and Next, although down, showed some resilience. And New Look and the Co-Op actually registered an increase on last year's sales.

But this is not the whole story. Margins across the sector are being squeezed as shops cut prices to attract customers. Profits in 2009 are likely to be lower than in previous years. And there was some depressing news yesterday from one of the biggest retailing beasts. M&S reported Christmas sales down 3.4 per cent on 2007. This is by no means as bad as some predicted, but M&S's executive chairman, Sir Stuart Rose, has decided that he must make cuts in response. He announced yesterday that 1,230 M&S staff will lose their jobs and 25 smaller food outlets will close.

There is more pain awaiting the retail sector. Some retailers in the South have benefited from the falling value of the pound against the euro as shoppers from the continent have been lured across the Channel to pick up bargains. But more will feel the negative effects of sterling's depreciation as the cost of importing stock from overseas suppliers goes up.

There is not a huge amount the Government can do to help the sector directly. The Treasury's recent cut in value added tax was intended to boost consumer confidence, but appears to have been swamped by retailers' other discounts. Ministers will evidently have to seek other ways to restore Britain, and its dominant retail sector, to the rude economic health of recent years.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Ashdown Group: Front-End UI Application Developer

£30000 - £40000 per annum + Benefits: Ashdown Group: Front-End UI Application ...

Recruitment Genius: Digital Account Executive

£18000 - £26000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Service Engineers - Doncaster / Hull

£27000 per annum: Recruitment Genius: Domestic Service Only Engineers are requ...

Recruitment Genius: Employability / Recruitment Adviser

£23600 - £27500 per annum: Recruitment Genius: The Employability Service withi...

Day In a Page

Read Next
 

South Africa's race problem is less between black and white than between poor blacks and immigrants from sub-Saharan Africa

John Carlin
Queen Elizabeth II with members of the Order of Merit  

Either the Queen thinks that only one in 24 Britons are women, or her Order of Merit is appallingly backward

Janet Street-Porter
Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...