Retail news round-up on December 31, 2014: Asda’s Clarke warns of challenging year for grocers, Next boss labels Black Friday ‘pointless’, retail sales to rise 2% next year.
Asda chief warns 2015 will be challenging for grocers
Asda chief executive Andy Clarke has said he has never seen the level of profitability fall so quickly in the supermarket sector as over the course of the last year. Clarke believed 2015 could be as challenging. In an interview with BBC Radio 5 live’s Wake Up to Money, he said discount grocers have had a striking impact on retailing.
Black Friday discounts pointless says Next boss
Next chief executive Lord Wolfson has said that offering bumper discounts in the run-up to Christmas on Black Friday is pointless, The Independent reported. Wolfson said that Next has no plans to copy competitors which held one-day Sales just weeks before Christmas. “I think retailers have to stick with their approaches because it gives customers confidence [to know that] when they pay full price [for an item] it won’t suddenly be on sale a few weeks later.”
Retailers can expect tough year ahead
Retailers are likely to face a tough 2015 when sales are expected to rise by 2%, a level similar to this year. Continued low earnings growth, price deflation and uncertainty about the outcome of the general election in May, as well as the potential resurgence of problems in the eurozone, are all expected to weigh down on consumer spending, according to a study by KPMG and Ipsos.
Food retailers will be hardest hit. Their sales are likely to slip by at least 1% as fierce competition from discounters, commodity deflation and austerity-minded shoppers take their toll. Grocers’ profits are also likely to suffer from shoppers’ continuing love affair with online purchasing, which is more costly to run than stores.