Now that the August bank holiday is out of the way and a torrid summer, in business terms, is coming to an end, what is the outlook for the sector as the year winds down?
The back-to-school offensive is in full swing and Halloween is still to come but, from here on in, retailers will be focused on Christmas. This year it will matter more than most after extremes of weather, a squeeze on shoppers’ finances and a market panic that has pushed retail valuations down.
Few analysts are prepared to bet on how Christmas will go. But, after this year’s travails it looks as if store groups are preparing to go into the prime selling season lean and mean.
Last week, for instance, cards firm International Greetings warned that it would not meet profit targets because of the tough stance being taken by British retailers on supply terms. That story is probably playing out across the retail industry as stores ensure they are in good shape to either boost a good Christmas or take the edge off a bad one.
The big unknown is how consumers feel. Rising debt and interest rates coupled with declining disposable cash may dissuade them from traditional overindulgence. Optimists would say that shoppers have typically been reluctant to rein in spending for the year’s biggest holiday.
Such uncertain conditions mean that the City jury is likely to remain out. A swathe of AGMs, results and trading data over the next month – including Home Retail, John Lewis and the BRC’s monthly figures – will help shape the City’s stance in the wake of the crisis over “sup-prime contagion”.
Retailers will hope for the best while being ready for the worst. In its present mood, the City will probably be pleased with anything but the worst.
DSGi under Browett
As DSGi boss John Clare steps down next week, with well-deserved applause, how might the electricals group shape up under incoming chief executive John Browett.
He does not start until December and, until Browett unveils his vision of the future, expect DSGi to be the subject of intense speculation. Analysts have been dusting off their sum-of-the-parts valuations in case of a bid or break-up attempt, the merits of changing strategy will be debated and observers will try to second-guess Browett’s views – especially on the relationship between shops and online. Clare leaves in good shape, but gossip about what shape it will take in future is likely to be the talking point for a while.