In a world where one of the largest economies suffers a massive stock market plunge, you could be forgiven for thinking you’d woken up in 2008.
In a world where countries are on the brink of going bust and one of the world’s largest economies suffers a massive stock market plunge, you could be forgiven for thinking you’d woken up in 2008.
But the difference is, while Greece and China are battling their own, quite different, economic woes, in 2015 the UK is looking in good shape.
Prices at the pumps and the tills are falling, something the grocers know only too well. With inflation static, employment levels on the up and wage growth increasing, that has put more money in people’s pockets, to the tune of £18 according to Asda’s Income Tracker.
It reported UK households on average had £189 a week of discretionary income in June 2015, and importantly the improving trend was felt nationwide, not just in the more sheltered south.
According to Shore Capital analyst Clive Black, these upticks are reflected in rising consumer confidence; it swung to its highest level in June since the late 1990s, GfK data showed.
On a more macro-level, the Ernst & Young Item Club forecasts GDP growth of 2.7% this year and next.
But – and there is a but – despite all the positive data, there are some troublesome factors that retail chiefs will have their keen eye on.
For starters, how much of the extra discretionary spend will end up in retailers’ pockets?
Interest rates are also a cause for concern.
After six years at 0.5%, the Bank of England is expected to increase base rates and Black forecasts any rise “will temper some exuberance on household expenditure, particularly as rising housing costs are absorbed, perhaps manifested in an easing of consumer confidence and bigger ticket expenditure”.
Meanwhile Ernst & Young forecasts a major increase in taxes on households as well as a massive squeeze on welfare payments to address the “very challenging” new surplus target set by the Chancellor. It adds that the introduction of the so-called living wage “poses a clear risk to hours and employment”.
And of course retailers’ structural challenges haven’t disappeared; dealing with over-burdensome property estates and attracting the right skills while addressing consumer’s convenience demands and their love of a bargain is no mean feat.
Overall though, the gloom of the recession years are slowly starting to feel like a distant memory. Retailers’ challenge now is to make hay while the sun shines.
- Nicola Harrison is content editor at Retail Week