There is something disturbing going on in UK retail. The January Sales, which were stupendous online because of low footfall before a rainy Christmas, have never stopped. An upmarket bathroom company did not take enough percentage off in the January Sales and must have had to whip another television advertisement out to catch up with its rivals. In mid-May they are still in 50% off sales mode and have been joined by DIY chains, especially for kitchens.
Everywhere you go, there are 10% off days and up to 30% off stickers in shop windows. Austin Reed, beloved of women city workers has just gone under. You would think that there was room for a high quality tailor but the markets have changed. It seems as if everyone is looking at cheaper clothes, discounted cars etc.
Economists did say in 2012/2013 that there would be less spending by 2016 as a result of cutting the deficit. The result has been higher utility and petrol bills with few or no pay rises. It was thought that the spending of baby boomers taking lump sums from their pensions would fill that gap. However, much of their spending is going on holidays abroad, thereby taking money out of the British economy.
Unfortunately this government does not seem able to consider consequences of its actions. BHS, a beloved retailer, rival to M&S has just gone into administration and the government allows it. Why was the Business Minister, Sadiq Khan not involved in a pre-administration solution? Its 11,000 employees are now looking for work plus 1,200 people working for Austin Reed.
What is the solution? Company boards must go back to basics and find out or confirm who is their target market. For example, there is no point producing high-heeled boots for sale to 70-year old baby boomers.
The highest consumer spending is generally speaking, the sector with the most free cash. This used to be those on welfare benefit, but cuts and refusals across the board means there is another huge group looking for paid work and cutting their spending. Some of them are second-generation claimants.
Let’s hope that the people with jobs become more aware and a little less smug. The UK has just had two negative quarters of growth, i.e., nothing. Banks are writing to their customers saying that they are cutting their savers’ rates from measly to nothing.
The future of shopping is online. I bought a winter coat online in the January Sales and it arrived immaculately packed, within two days. Having said that, I saw a dress online in a Sale and went to the store to try it on. I came out with something totally different, probably due to the skill of the Sales Assistant. The prices online and instore were identical. Distribution is the key to profit.
Concessions in larger department stores have worked in the UK over the last ten years. Are they still working? If not, who is looking at the problem and what answers have they come up with? I fully expect to be told it is ‘commercial, in confidence’, but meetings between the top ten retailers can surely help each other.
Any ideas on the way forward, because we are sliding into recession? I hope that the government doesn’t blame possible exit from Europe for a dwindling economy. We have a lot going for us; we just need positive guidance.