After the unprecedented financial crises of the past few weeks, at last there’s good news. The Government’s rescue of the banks has restored some stability to markets, which was reflected in stock market surges at the start of the week.
But retailers, which have lost half their stock market value since January, remain unloved.
Now that the problems of the financial system have begun to be addressed, the focus is on the outlook for the real economy. And out there on the high street, in offices and on factory floors – workplaces where changes to confidence, employment and earnings directly affect retail performance – the picture isn’t pretty. There seems little doubt recession is looming. The debate is how long it will last and how deep it will bite.
The BRC’s sales data for September illustrated how hard-pressed the retail sector is. A 1.5 per cent like-for-like fall means sales have fallen for six out of the past seven months. It was no surprise – but still depressing – that furniture groups suffered their worst performance in eight years.
So far, so dismal. But the sector is used to relentlessly downbeat stats. The real question is what can be done.
Tycoon Sir Philip Green, in whose hands the rescue of Iceland’s economy as well as that of the high street now partly lies, has been running a one-man PR campaign against glass-half-empty thinking. It’s easy to scoff, but now that financial turmoil may begin to abate the background music is going to be key to sentiment in the real economy.
Despite undoubted pressures on consumer spending, confidence will be a key determinant of shopper behaviour in the coming months. The less depressed and fearful shoppers’ mindset, the better the chances that Christmas – if not quite the proverbial golden quarter – is as good as possible.
The tone set by retail’s leaders will be taken up in stores. The temptation among some at the coalface will be to see preparations almost as a cosmetic exercise, as resignation that the festive period will be a write-off takes hold.
The opposite is true. This year of all years, consummate execution, perfect service, effective promotions and a crucial role in re-establishing the feel-good factor will separate retail’s winners and losers. The result matters not just for the future of embattled store groups, but for re-establishing retail’s City appeal. Real world success – or at least survival – will be the only guarantor of renewed investor interest.
George MacDonald is deputy editor of Retail Week
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