August is the quietest month in the retail calendar, with most store chiefs taking well-earned holidays. Yet last August those chief execs – and indeed the world – were hit with something that made them put down their cocktails and dust off their blackberries.

On August 9 last year, the European Central Bank and the US Federal Reserve injected US$90 billion (£45 billion) into the jittery financial markets. At the time, the new PM Gordon Brown said Britain was well placed to weather the storm. It didn’t quite work out that way.

Tomorrow marks the first anniversary of the credit crunch and there is no sign of it easing off. The crisis has taken its toll on UK retailers and most expect at least another 18 months of difficult trade.

This week, HSBC reported that net profits tumbled 29 per cent in the most difficult financial markets for “several decades”. The loss is attributed to the weakening in the US housing market but the bank points out that the UK and other economies in Europe have also weakened.

The UK housing slump has hit big-ticket retailers such as Land of Leather and ScS. Yet it isn’t just sofas that aren’t selling – it’s homewares in general.

Earlier this year, many retailers argued that consumers would still spend money doing up their houses even if they weren’t planning to move. This trend has not caught on with consumers. Carpetright’s Lord Harris pointed out this week that consumers were cutting back on home improvements, as total sales from the group’s 688 stores fell 9.2 per cent.

Other retailers – namely Topps Tiles – seem to be kidding themselves if they think that consumers will shell out on home improvement while they struggle to weigh up food inflation and rising energy bills.

Topps Tiles chief executive Matt Williams believes consumers will start to think about DIY projects more in their existing homes as the housing market toughens. But it’s a dream world to think sales will recover as consumers do up their homes while the climate stays as it is.

Topps – which reported revenues down 2.7 per cent for the 17 weeks to July 26, compared with a 14.4 per cent rise the previous year – needs to concentrate on bringing its debt down so it doesn’t break banking covenants.

While it was once the darling of the City with only a few competitors snapping at its heels, it now has Travis Perkins’ Tile Giant breathing down its neck. And, at the anniversary of the credit crunch with no signs of it abating, retailers should prepare for another tough year.

Jennifer Creevy is news editor of Retail Week

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