If giant banks are falling victim to the downturn, it’s a sign retailers can’t afford to be complacent.
This time last year no one would have predicted that some of the world’s biggest banking giants, including Lehman Brothers, Merrill Lynch and HBOS, would be plunged into financial turmoil.
I certainly wouldn’t have put any of my money on it. Yet today, in the current climate, I’m not the least bit surprised.
High-risk mortgages and falling share prices have reshaped Britain’s financial landscape, with the once calm waters now choppy and unpredictable.
The Northern Rock crisis was the first chink in the armour, and the point at which consumer confidence began to waver.
Like a game of snakes and ladders, as soon as things appear back on track there’s another blow to the economy to bring us back down to earth.
But in every crisis there are winners and losers. The£12.2 billion takeover of HBOS is a prime example. Suddenly, out of nowhere, Lloyds TSB has become a “superbank” with almost a third of the UK’s savings and mortgage market – yet 40,000 people are now at risk from losing their jobs, many based here in Yorkshire.
I’m surely not the only one who was surprised that such a merger was allowed to happen – in previous times it would have fallen foul of Britain’s tough competition laws.
Let’s imagine in six months’ time one of the big four supermarkets fell victim to the credit crunch. Would the OFT allow one of the remainder to mop them up? I’m not so sure.
But the demise of the banks highlights that none of us are immune to the economic slump. The likelihood is that not all of us will be here this time next year. I have a few names in mind, but I’ll keep the sweepstake to myself – for now.
As a value-driven supermarket, I suppose we’re fortunate enough to weather the storm. People will always need to eat. But that doesn’t give us a free pass to complacency.
Like any company, we’re in business to make a profit. But I passionately believe there is no excuse for any retailer to take advantage of these difficult circumstances to make even more profit. Petrol retailers take note.
So as I look at the prospects for the rest of this year, I expect two things to happen. Firstly, food price inflation will finally peak; secondly, we will start to see many food and grocery products come down in price.
That’s why last week we put our money where our mouth is, announcing price cuts on more than 5,000 products, including 300 items in our Smart Price economy range. These are not short-term price promotions – they’re real and long-term cuts.
As retailers we may not be able to solve the country’s economic problems single-handedly, but we can offer our customers some hope amid the gloom.