But this isn’t just about two already-weak retailers hitting trouble. They are symptoms of a much wider malaise in non-food retailing. As our front page says, the sector really is on the critical list.
Talk informally to the UK’s biggest fashion retailers and they will say sales are down. And we’re not talking 1 or 2 per cent. Weekly sales falls in the high teens and 20s are no longer exceptional, but the norm for mainstream high street fashion chains. Everyone is suffering – even Tesco, which revealed stellar results this week, is being hit in clothing.
The BRC said fashion sales in March were the worst for eight years, and that’s probably understating it. Forget the weather and the timing of Easter – this is about the market entering a severe and prolonged consumer downturn and the casualties we’ve seen this week are only the beginning.
But it’s not just fashion and it’s not just the UK. Carrefour boss José Luis Duràn’s words at the World Retail Congress last week (page 18) will resonate with retailers the world over grappling with the deadly combination of rising costs and falling consumer confidence.
When the problems are so global and so pervasive, there are no easy answers. Keeping a tight rein on costs, getting product spot-on and spreading risk internationally will help mitigate the contagion. But that’s all it will do, because no retailer can buck the global economy.
Tesco on top again
In these conditions, the results posted by Tesco this week were quite remarkable. Whatever criticism is thrown at it, and whatever doubts are expressed about its plans – such as its move into the US – Sir Terry Leahy and his team seem to thrive on proving the critics wrong.
This year will be harder: food inflation is proving a real challenge and the meteoric non-food growth revealed on Tuesday will be hard to sustain in this climate. But whatever challenges come along, it seems certain that Tesco will continue to set the standard for UK retailing.