The Big CC and The Retail Sector

Take a walk around any national shopping centre and you'll find discount days and mid-season sales galore. The latest Office for National Statistics' data revealed sales on the UK's high streets continued to slow throughout October. Sales fell by 0.4% in September, cutting annual growth to 1.8%, compared with 3.3% a month earlier. Marks & Spencer saw like-for-like sales fall 6.1% in the 13 weeks to 27 September, while Arcadia experienced a 2.8% drop from 2007.

Pulling out the stops retailers are combining Christmas merchandise with discount days and mid-season sale offers. Marks & Spencer is holding a 20% discount day while Debenhams is putting on a three-day discount ‘spectacular’. Elsewhere the likes of Wallis, LK Bennett and Burtons have announced early sales.

The pinch is being felt across the board and is affecting sales in all sectors. The government recently cut interest rates by 1.5% to encourage consumer spend, however, retail analysts say that the move has come too late to bump up sales in the run-up to Christmas.

Naturally it's a worrying time for retailers and the Retail Trust Helpline, a free and confidential service for all retail employees, has reported a 25% increase in calls over the last three months. The Helpline has recorded a sharp rise in calls requesting redundancy information along with stress and financial worries.

Commenting on the situation the Bank of England warned that the recession would continue well into 2009, however, key strategies enforced by the government and bank will ensure that it is relatively short-lived.

"This is a difficult and unprecedented time, but we will come through this," Bank Governor Mervyn King told the BBC.

In the meantime retailers are advised to tighten their belts and ride out the storm with effective financial and marketing plans. That said the general feeling amongst a growing number of retailers is that business rates could be reassessed and restructured by the Government.

Despite all the negative publicity some retailers are positively thriving in this challenging market. Mothercare chief executive Ben Gordon said: "We are pleased to announce strong first-half results for the Mothercare group. Our international business has delivered its best ever half and, despite a challenging market, we have grown like-for-like sales in the UK, with Direct performing particularly well.”

Peacocks reported a 5% like-for-like rise over the past seven weeks, with an 11% margin. While online retailer ASOS.com is continually dodging credit crunch gloom with sales more than doubling in the six months to the end of September. Tartan dresses, platform shoes and statement jewellery were among ASOS’s latest bestsellers.

 

 

Independent womenswear boutique Sassy & Boo commented: "What we've noticed is that our customers are spending more on accessories and jewellery rather than the more expensive top-end clothing items."

Tough times are indeed ahead for retail but the underlying message is that there is light at the end of the tunnel.

 

For business advice why not visit the Fashion Capital Knowledge Bank section which covers everything from Business Support to Retail Practices.

 

The Retail Trust Helpline: (0808 801 0808)

 

JI