Retailers should seek opportunities to generate sales

No comments

Falling fuel and food costs mean consumers are just that bit more flush.

I am reluctant to mention it amid the general doom and gloom around the economy and its impact on retailers, but I think there are causes for optimism about consumer spending in the second half of 2012.

My theory is based on the increasing evidence that inflation is falling and customers are finding they have more disposable income than expected.

We have already seen a fall in fuel prices in the last two months, caused by a drop in the cost of crude oil. This is delivering savings at the pumps of up to 8p a litre compared with the highs in April, worth £20 per month for an average driver.

The rising price of food has been another pressure on consumers, but again there is light at the end of the tunnel. Weakness in the euro relative to the pound is lowering imported food costs.

A year ago, the euro was 1.10 to the pound whereas it is now around 1.24. The hugely competitive nature of our supermarket sector means consumers will rapidly benefit from this change.

If you add to this the aggressive voucher campaigns and petrol discounts that the leading operators are using to win market share then, again, it’s good news for consumers.

The outlook on jobs still seems uncertain, but generally the news on employment is neutral to positive rather than negative – the private sector is creating new opportunities as the public sector cuts back. There were about 843,000 new jobs in the private sector versus a fall of 424,000 in the public sector over the last two years.

Halfords is one of the companies behind that statistic. We recently announced the creation of up to 1,000 jobs in areas where we are investing in growth. We’ve identified opportunities in the auto aftercare market where motorists need car repairs and the replacement of parts. To achieve this means having more mechanics and colleagues ready to help customers.

So how do customers feel? Well, even if confidence isn’t restored there are some signs that they have become immune or indifferent to negative factors in the economy. For instance, the eurozone crisis – it was a cause for concern three months ago but unlike our politicians, British consumers now feel a degree of remoteness from the impact of external debt worries and are thinking instead about their own circumstances. Some are even joking about the prospect of a cheaper continental vacation or the falling price of a holiday home abroad.

All of this should translate into higher discretionary spending, which is exactly what retailers need. There are signs that’s happening. Recent results from Currys and Argos show that customers are spending on TVs and iPads. Equally, the regular positive news from John Lewis confirms buoyancy in certain categories.

There will be temporary impacts on some retailers’ businesses – appalling spring weather made it tricky to trade successfully in such unseasonal conditions. It’s too early yet to confirm if the good signs in consumer spending will translate into positive trends or whether my optimism is misplaced. Either way, we always need to seek opportunities to generate sales. When things do ease, the rewards will be even greater.