The bold 1.5 percentage point interest rate cut was supposed to help restore consumer confidence.
What Sir Stuart Rose admitted this week, backed by other retailers privately, is that it’s done nothing of the sort.
The spending vacuum that opened up with the collapse of the banks last month has done nothing but widen since. It’s inevitable we’re going to see more of the aggressive discounting that kicked off yesterday as retailers jostle for what limited Christmas spending there’s going to be.
But while people will always spend at Christmas, the real horror show is likely to come next year. The problem is that whatever the Government tries to do to shore up consumer confidence, it shows no sign of working.
As soon as Christmas is out of the way the contagion of collapses and consolidation among the smaller retailers is likely to spread into the more established names, starting with the now inevitable massive upheaval at Woolworths.
The Government has rescued the banks and has tried to help consumers. What it needs to do now – starting with next Monday’s pre-Budget report – is help retail businesses. We’ve been inundated with responses to our Rate Rage campaign and it’s not too late to lend your support.
Retailers have been cutting jobs and hours like crazy. This costs the taxpayer more and weakens the economy further, but if things worsen at the present rate we’ve only touched the tip of the jobs iceberg. A concession from Mr Darling to help retail through these tough times would go a long way.
Getting online right
When Retail Week first tried to do a Christmas shop online the experience was horrendous. Two years on (page 24), it has been transformed. With only a couple of exceptions, the shopping experience is now painless, fulfilment is better and most stores are better geared up to accept online returns.
No retailer has it all right, but it is clear investment in this vital area is paying off. In a market as brutal as this, retailers cannot give potential customers any excuse not to spend. On this evidence, most are ensuring this doesn’t happen.
Visit retail-week.com today to watch Tim Danaher and George MacDonald discuss the week’s retail news in TGi Friday
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