Unemployment and housing are factors that could prolong the recession, says Richard Hyman

Unsurprisingly, the question of whether we are seeing green shoots or not was a key topic of conversation at the World Retail Congress in Barcelona earlier this month. The only question to rival it was its very close relative: are we still in recession or not? 

A wide spectrum of opinion characterised debate but I wonder how connected these questions are to the world of retail. In my opinion, both questions are too academic and tend to miss the point.

I believe there are two key issues at the heart of any sustainable recovery of the consumer economy. The first concerns unemployment and job security. It is clear
that the number of people out of work will continue rising for some time yet. However, this is only part of the problem. Among those still in work is a widespread anxiety about the possibility of losing one’s job, and this is affecting spending patterns.

The second issue is housing. The fact that around 70 per cent of households are owner-occupied is central. Moreover, the value of this asset dominates personal finances. House values are fundamental to propensity to spend.

While these two fundamental factors are clearly related to confidence, there is a basic reality driving attitudes. This is not about media hype, and it’s not about talking up or down. It’s actually about the reality of the worst recession any of us have ever seen and a speedy and responsible reaction from consumers: they feel less well-off and less secure, and they have changed their spending accordingly.

I cannot imagine how we can have a recovery worthy of the name without a measurable improvement in these two areas. Meanwhile, any green shoots that might emerge may well blossom, but many retailers will have to watch enviously from the sidelines waiting for the real economy to recover.

Not all retailers are that patient, and not all need to be. Barcelona was a mixture of the realistic – not being scared to admit how tough it is – and the positive.

Presentations from young fashion designers were a breath of fresh air. Young visionaries who embrace the idea of hard work and are inspired to reach out to an audience or a market via retailing. They underline the need for retail to remain fully committed to creativity, while increasingly embracing the managerial tools and techniques needed to exercise tight control.

This balance between art and science will be even more critical going forward. The changing structure of retail means everyone will have to run faster way beyond the end of the recession.

Rather more modest market growth needs to feed a growing number of mouths. A narrowing margin for error will require tighter management. Nevertheless, maximising sales is everything and inspiring consumers will become increasingly important too.

In Barcelona we saw a glimpse of a future that will undoubtedly be tough, but will not lack inspiration.

Richard Hyman is strategic retail adviser at Deloitte